This document discusses the basic concepts of demand and supply analysis. It defines a market as where buyers and sellers meet. It explains the law of demand, which states that if price increases, quantity demanded decreases, and vice versa. It also discusses demand and supply schedules and curves, and how market equilibrium occurs when quantity demanded equals quantity supplied. Forces that can shift demand and supply such as income, tastes, prices of substitutes, and technology are also outlined.

1. The Basic Analysis of
Demand and Supply

2. • A market is where buyers and sellers meet.
• Take note that when there is demand for a good
or service, there is a market.
Market

3. Two types of Market:
1. Wet Market
2. Dry Market

5. Methods of Demand Analysis
1. Demand Schedule
2. Demand Curve
3. Demand Function

7. Hypothetical Demand Schedule for Rice per month
Price Quantity Demand
25 10
20 20
15 30
10 40
5 50
0 60

8. Demand Curve

9. Demand Graph

10. The Law of Demand
If price goes UP, the quantity
demanded of a good will go DOWN.
Conversely, if price goes DOWN, the
quantity demanded of a good will go
UP ceteris paribus.

11. Ceteris Paribus
“all other things being equal”

14. Quiz Time

15. Hypothetical Demand Schedule for candy per month
with the given slope = 10
Price Quantity Demand
5 10
4
3 30
2
1 50
0 60

16. Change in Quantity Demanded
Vs.
Change in Demand

22. Forces that cause the demand curve to change.
• Taste or Preferences
• Changing Incomes
• Occasional or Seasonal Products
• Population Change
• Substitute and Complementary Goods
• Nominal or Normal Good and Inferior Good
• Expectations of Future Prices

31. Example Situation:
We already know that the price of gasoline in the domestics market tends to
change every now and then, because of the price changes, private cars owners
tends to lessen the consumption of gasoline during high prices by not using their
cars, but tend to increase their consumption during low prices by utilizing more
their cars.
On the other hand, because of the increase in the price of gasoline, the sale
of cars has declined. This is because cars and gasoline are complementary goods
so that the increase in the price of gasoline will result in a decline in the sale of
cars. Of course cars will not run without gasoline so that the higher the price of
gasoline (for example P100.00 per liter) the lower will be demand for cars. The
reverse will happen if the price of gasoline will decrease to, say P30.00 per liter or
even lower.

33. Methods of Supply Analysis
1. Supply Schedule
2. Supply Curve
3. Supply Function

38. Change in Quantity Supplied
Vs.
Change in Supply

43. Forces that cause the supply curve to change.
• Optimization in the use of factors of production.
• Technological Change.
• Future Expectations.
• Number of Sellers
• Weather Conditions
• Government Policy

49. Market Equilibrium

50. Market Equilibrium
• The meeting of supply and demand results to what is referred
to as market equilibrium.
• As earlier said, the market referred to here is a situation
where buyers ad sellers meet while equilibrium is generally
understood as a state of balance.
• It generally pertains to a balance that exists when quantity
demanded equals quantity supplied.
• It is a general agreement of the buyer and the seller in the
exchange of goods and services at a particular price and at a
particular quantity.

51. Equilibrium
• The meeting of supply and demand results to what is referred
to as market equilibrium.
• As earlier said, the market referred to here is a situation
where buyers ad sellers meet while equilibrium is generally
understood as a state of balance.