Demand and supply is a part microeconomics, which is needed to understand relationship between consumer and producer. It is needed to understand prices of products in market

1. Engineering Economics
{Demand and supply}
Snehal Chaudhari 22020092 253064
Nikhil Nagdev 22020291 253070
Shubham Bhojane 22020154 253072
Tanmay Barge 22020171 253073
Presented By:
BRACT’S, Vishwakarma Institute of Information Technology.
Under guidance of
Prof. M.N.Jagdale sir
SCE Presentation of PME on

2. Contents
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Engineering Economics
Demand
Law of Demand
Types of demand
Shifters of demand
Supply
Law of supply
Shifters of supply
Market equilibrium
Elastic of demand
Elastic of supply
Conclusion
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Engineering economics
Engineering
Economics
Engineering
Economics
What is Engineering ?
Engineering is the application of scientific, economic, social, and practical knowledge in order to
design, build and maintain structures, machines, devices, systems and materials.
What is Economics?
A social science of how limited resources are used to satisfy unlimited human wants.

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What is Engineering Economics ?
Engineering economics is about making decisions, it is the application of economic techniques to
the evaluation of design and engineering alternatives.
Engineering Economics
Micro-economics Macro-economics
Microeconomics studies individuals
and business decisions
1) Demand, Supply and equilibrium
2) Production theory
3) Costs of production
4) Labor economics.
Macroeconomics analyzes the
decisions made by countries and
governments
1) Policy making
2) Making economic decision for
country

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Demand
What is Demand ?
Every want supported by the willingness and ability to buy called demand.
Example
If a person wants a car but cannot pay for it, then there is no demand and only desire is there but if
he/she is able to pay for it then the desire or want is changed into demand.
A product or service is said to have demand when these three conditions are satisfied
1) Desire on the part of the buyer to buy
2) Willing to pay for it
3) Ability to pay a specified price for it.

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The law of Demand
The law of demand explains that there is an inverse relationship between price and quantity
demanded
Example:
When the price goes down for product (milk), the quantity of consumers buy will increase.
Price Quantity
Demanded
₹60 10
₹50 20
₹40 30
₹30 50
₹20 80
Demand
Schedule for milk 10, 60
20, 50
30, 40
50, 30
80, 20
0
10
20
30
40
50
60
70
0 20 40 60 80 100
Price
in
₹
Quantity
Demand curve

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Effects proving Law of Demand
2) Income Effect
3) Law of diminishing
marginal utility
1)Substitution effect
Changes in price motivate
consumers to buy relatively
cheaper substitutes goods
Example: Samsung and Mi
Changes in price
affect the purchasing
power of consumers
income
Example: Milk
As you continue to consume
a given product, you will
eventually get less addition
utility (satisfaction) from
each unit consume.
Example: Apple

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Types of
Demand
Individual
demand
Market
Demand
It refers to demand from the
individuals, family or house
hold. It is a single consuming
entity’s demand
It refers to the total demand of all
buyers taken together. It is
aggregate of quantities of a
product.

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Shifters of Demand curve
0
10
20
30
40
50
60
70
80
0 20 40 60 80 100
Price
in
₹
Quantity
Demand curve
Taste or preferences
1
Number of consumers
2
Price of related goods
3
Income
4
Expectations
5

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Supply
What is Supply ?
Supply is the willingness and ability of producers to create goods and services and offer to sell
different quantities of goods at different prices during specific period of time.
Example
If a person wants to manufacture the cars but not have the ability for it, then there is no supply and
only desire is there but if he/she has the ability to create it then the desire is changed into supply.
Quantity Supplied
It is the number of units of goods produced and offered for sale at a specific price.

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The law of Supply
The law of supply explains that there is a direct relationship between price and quantity supplied
Example:
When the price goes up for milk, the quantity producers make will increase.
Price Quantity
able to be
Supplied
₹60 80
₹50 50
₹40 30
₹30 20
₹20 10
Supply Schedule
for milk 80, 60
50, 50
30, 40
20, 30
10, 20
0
10
20
30
40
50
60
70
0 20 40 60 80 100
Price
in
₹
Quantity
Supply curve

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Shifters of Supply curve
Price of resources
1
Number of producers
2
Technology
3
Tax and Subsidies
4
Expectations
5
0
10
20
30
40
50
60
70
80
0 20 40 60 80 100
Price
in
₹
Quantity
Supply curve

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Market Equilibrium
The market equilibrium comes at the price and quantity where the supply and demand are in
balance. At this point, the amount (price and quantity) that buyers want to buy is just equal to the
amount (price and quantity) that the sellers want to sell. At equilibrium, the price and quantity
tend to stay the same as long as the other things remain equal.
80, 60
50, 50
30, 40
20, 30
10, 20
10, 60
20, 50
30, 40
50, 30
80, 20
0
10
20
30
40
50
60
70
0 20 40 60 80 100
Price
in
₹
Quantity
Surplus
Shortage
Supply Curve
Demand Curve
Equilibrium Point
Surplus is the position where quantity
demanded is quite less than the quantity can
be supplied. In the given case the surplus is
70
Surplus
Shortage
Shortage is the position where quantity
demanded is quite high than the quantity can
be supplied. Which produce the shortage. In
the given case the shortage of 70 is produced

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Elasticity of demand
Measures how sensitive quantity demanded change with respect to change in price.
Mathematically the elasticity of demand coefficient is given as,
ed =
% change in Quantity
% change in price
=
𝑄2−𝑄1
𝑄1
𝑃2−𝑃1
𝑃1
For example consider a person demanding 500 units of its outputs at a price of Rs.5
each, when the prices increase to Rs.10 the demand of person decreases to 300 units
then the elasticity of demand will be
ed =
% change in Quantity
% change in price
=
𝑄2−𝑄1
𝑄1
𝑃2−𝑃1
𝑃1
=
300−500
500
10−5
5
= −0.4
Where,
𝑄1 is the quantity demanded before price change
𝑄2 is the quantity demanded after price change
𝑃1 is the original price
𝑃2 is the new price

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Types of Elasticity of demand
𝑒𝑑 = 1 𝑒𝑑 < 1
𝑒𝑑 > 1
𝑒𝑑 = ∞
𝑒𝑑 = 0
Price
Quantity
Perfectly Inelastic 𝑒𝑑 = 0
Relatively Inelastic 𝑒𝑑 < 1
Unit Elastic 𝑒𝑑 = 1
Relatively Elastic 𝑒𝑑 > 1
Perfectly Elastic 𝑒𝑑 = ∞

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Elasticity of Supply
Measures how sensitive quantity supply change with respect to change in price.
Mathematically the elasticity of supply coefficient is given as,
es =
% change in Quantity
% change in price
=
𝑄2−𝑄1
𝑄1
𝑃2−𝑃1
𝑃1
For example consider a firm supplying 500 units of its outputs at a price of Rs.5
each, when the prices increase to Rs.10 the firm supply increases to 800 units then
the elasticity of supply will be
es =
% change in Quantity
% change in price
=
𝑄2−𝑄1
𝑄1
𝑃2−𝑃1
𝑃1
=
800−500
500
10−5
5
= 0.6
Where,
𝑄1 is the quantity supplied before price change
𝑄2 is the quantity supplied after price change
𝑃1 is the original price
𝑃2 is the new price

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Types of Elasticity of supply
𝑒𝑠 = 1
𝑒𝑠 < 1
𝑒𝑠 > 1
𝑒𝑠 = ∞
𝑒𝑠 = 0
Price
Quantity
Perfectly Inelastic 𝑒𝑠 = 0
Relatively Inelastic 𝑒𝑠 < 1
Unit Elastic 𝑒𝑠 = 1
Relatively Elastic 𝑒𝑠 > 1
Perfectly Elastic 𝑒𝑠 = ∞

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Conclusion
So from all the discussion we can conclude that the laws of supply and demand can be used to
show the relationship between producers and consumer.
It is used to forecast the demand of consumers in upcoming time.
It gives plan for changes required in production, inventories, raw materials, human resources etc.
So that a maximum profit can be reached.

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References
https://www.slideshare.net
https://www.youtube.com/
https://www.investopedia.com
https://www.britannica.com

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Thank you
Thank you