1. Basic Elements Of Supply And Demand Chapter 3

3. Demand Curve 20 1 15 2 12 3 10 4 9 5 Quantity Price

5. Change in taste: Advertisement effect our taste Increase in demand Quantity X Price D2 D

6. Change in Prices of other goods (substitute ) E.g.: Price of coke increases, demand of Pepsi increases Price Increase in demand D2 D Quantity (Pepsi)

7. Change in Prices of other goods (Complement ) E.g.: Price of tea increases, demand of sugar decreases Decrease in demand D D1 Quantity (sugar) Price

8. Change in Income Quantity X Price Increase in demand D2 D

9. Change in Government Regulation (Sales tax) Decrease in demand D1 Quantity X Price

11. Supply Curve 0 1 7 2 12 3 16 4 18 5 Quantity Price

13. S’ S Quantity price Increase in supply

14. Quantity price S’ s Decrease In Supply

16. 20 0 1 15 7 2 12 12 3 10 16 4 9 18 5 Qty demand Qty supply Price

18. Quantity Price S D Excess Supply or Surplus 3 11 Excess Supply or Surplus

19. Quantity Price S D Excess Demand Or shortage Excess Demand Or shortage 3 11

20. Quantity S D Price Ceiling price Price Control: in which govt. restrict to suppliers and give them limits to charge In price Ceiling maximum amount restriction Price Ceiling 3 5 10 15

21. Quantity S D Price Floor In price Floor minimum amount restriction 8 5 10 20 price Price Floor

22. Demand and supply curve shifts and there effects on price and quantity P Q The supply curve shift to the left If supply Falls P Q The supply curve shift to the right If supply rise P Q The demand curve shift to the left If demand Falls P Q The demand curve shift to the right If demand rise Effect on price and quantity Demand and supply shift

23. Increase in Demand, Rightward shift Quantity Price S D D’

24. Shift in Equilibrium S’ Increase in supply, Rightward shift Quantity Price S D