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![Demand Schedule
Point Price [Rs per unit]
Quantity demanded of X
[kg. per month]
a
b
c
d
e
f
0.50
1.00
2.00
2.50
1.50
7.0
3.
52.5
3.00
5.0
1.0
1.5
1 2 3
0.50
1.00
2.00
Quantity of X
PriceofX
3.00
2.50
654 7
Demand Curve
a
b
c
e
d
f
1.50
Demand schedule](https://image.slidesharecdn.com/demandandsupply-180823131110/85/Demand-and-supply-5-320.jpg)
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Demand and supply
This document summarizes key concepts of demand and supply, including: - Demand is the quantity of a good consumers will purchase at a given price, governed by the law of demand. Supply is the quantity produced at a given price, governed by the law of supply. - Equilibrium occurs when quantity demanded equals quantity supplied at the equilibrium price. - Factors like income, tastes, prices of substitutes/complements can shift the demand curve. Factors like technology, input prices, and number of producers can shift the supply curve. - When price is above equilibrium, a surplus occurs. When price is below equilibrium, a shortage occurs bringing prices back to equilibrium.
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Demand and supply
- 1. DYNAMICS OF MARKETS DEMAND ANDSUPPLY (grade 10) L. MGAGA 201244296
- 2. Introduction The following slidesare the compilation of different slides from five different authors about the topic Demand and Supply. Authors : Ankit Bist Ujjwal 'Shanu‘ KASBIT Jiten Sharma NepDevWiki
- 3. Topics: • Demand Define demand Lawof demand Demand Schedule (elasticity of demand) Factors Affecting Demand curve (graphs) Markets equilibrium • Supply Define supply Law of supply Supply Schedule Factors Affecting Supply curve (graphs) Elasticity
- 4. Demand Definition: The amountof a particular economic good or service that a consumer or group of consumers will want to purchase at a given price •Law of demand :States that a quantity of a good demanded during a given period relates inversely to its price, other things constant. •Price increases Quantity Demanded decreases •Price decreases Quantity demanded increases •Creates a downward sloping demand curve
- 5. Demand Schedule Point Price[Rs per unit] Quantity demanded of X [kg. per month] a b c d e f 0.50 1.00 2.00 2.50 1.50 7.0 3. 52.5 3.00 5.0 1.0 1.5 1 2 3 0.50 1.00 2.00 Quantity of X PriceofX 3.00 2.50 654 7 Demand Curve a b c e d f 1.50 Demand schedule
- 6.
- 7. Factors effecting demandcurve (movements and shifts along the curve) 1. Change in taste 2. Prices of other goods • Substitute • Complement 3. Income 4. Government rules and regulation
- 8. 1.Changes in taste(shift in demand) • Consumers prefer platform shoes. • At $50, demand increases from 100 to 200. D $50 100 D2 200
- 9. 2.2.1Change in Pricesof other goods (substitute) Suppose the two cold drinks coke and Pepsi are substitutes E.g.: Price of coke increases, demand of Pepsi increases D 2D Quantity (Pepsi) Price Increase in demand
- 10. 2.2.Change in Pricesof other goods (Complements) D D1 Quantity (sugar)Price Suppose tea and sugar are complements (they work together) E.g.: Price of tea increases, demand of sugar decreases Decrease in demand
- 11. 3.Change in Income D2 D QuantityX Price Increase in demand The increase in income increases the quantity of goods demanded (demand increases shifts rightward)
- 12. 4.Change in GovernmentRegulation (Sales tax) D1 Quantity X Price Decrease in demand
- 13. SUPPLY: • Definition: Thetotal amount of a good or service available for purchase; along with demand, one of the two key determinants of price. Law of supply: If demand is held constant, an increase in supply leads to a decreased price, while a decrease in supply leads to an increased price.
- 14. Supply Schedule The increasein price increases the quantity supplied, e.g. price increase from 2 to 4 an quantity increases from 3 to .
- 15. Factors that effectthe Supply curve • Technology • Changes in prices of Alternative Goods • Changes in Relevant Resources • Changes in the Number of Producers • Changes in Producers Expectations
- 16. 1.Changes in technology •Technology is the economy’s stock of knowledge about how to combine resources efficiently Improvements in technology Causes an increase in supply More of the product is available at all prices
- 17. Changes in pricesof Alternative Goods• Alternative goods • Other goods that use some or all of the same resources as the good in question • Beef and leather. • If the price of beef decreases, producers will supply less beef thus decreasing the supply of leather. 400300 $6 S1 Above is the market for the supply of leather Q Leather Price
- 18. Changes in Relevant Resources •Resources that are employed in the production of the good in question • Increase in price of resources • Results in decrease in supply • Less of the good is available at all prices $9 500 600 S1 S2
- 19. Changes in theNumber of Producers • As the number of producers change so does the supply of the product • A decrease in the number of producers will lead to a decrease in supply
- 20. Changes in Producers Expectations •Expectation of future prices of resources or their own product can cause producers to change what they offer at each individual price
- 21. Demand, Supply &Market equilibrium
- 22. Market Equilibrium • Market •Includes all the arrangements used to buy and sell • Reduce transaction costs • The place where buyers and sellers meet to determine price and quantity
- 23. Equilibrium • At specificprice where: Quantity demandedQuantity demanded EqualsEquals Quantity SuppliedQuantity Supplied S D Q P $5 150 Equilibrium
- 24. Surplus When price >equilibrium price, then quantity supplied > quantity demanded. •There is excess supply or a surplus. •Suppliers will lower the price to increase sales, thereby moving toward equilibrium. Shortage When price < equilibrium price, then quantity demanded > the quantity supplied. •There is excess demand or a shortage. •Suppliers will raise the price due to too many buyers chasing too few goods, thereby moving toward equilibrium. EQUILIBRIUM SHORTAGE VS SURPLUS
- 25. SP Q 5 4 3 2 1 2 4 68 10 12 14 16 Price of quantity Quantity Shortage EQUILIBRIUM- shortage
- 26. S P Q 5 4 3 2 1 2 4 68 10 12 14 16 D Quantity Surplus EQUILIBRIUM- surplus Extent to which generation of goods, services, and resources (such as capital) exceeds their consumption is called surplus.
- 27. Summary of demand,supply &equilibrium Change in Supply Change in Demand Effect on Equilibrium Price Effect on Equilibrium Quantity Increase Decrease Decrease Indeterminate Decrease Increase Increase Indeterminate Increase Increase Indeterminate Increase Decrease Decrease Indeterminate Decrease
- 29. References • Ankit Bist(2011) DEMAND AND SUPPLY at http://www.slideshare.net/AnkitBist/demand-and- supply-10629356?qid=94fd494d-bed6-4867-a65f-f0d7a1e25582&v=default&b=&from_search=4 • Ujjwal Shanu (2013) DEMAND AND SUPPLY at http://www.slideshare.net/ujjmishra1/demand- and-supply-28840569?qid=94fd494d-bed6-4867-a65f-f0d7a1e25582&v=default&b=&from_search=8 • KASBIT (2011) Basic elements of supply and demand, at http://www.slideshare.net/imranbashir69/basic-elements-of-supply-and-demand • Jiten Sharma (2012) demand and supply at http://www.slideshare.net/JitenSharma1/demand- supply-market-equilibrium-15222434 • NepDevWiki (2012) 05 price elasticity of demand and supply at http://www.slideshare.net/NepDevWiki/05-price-elasticity-of-demand-and-supply