This document provides an overview of supply and demand concepts including:
1) It defines demand as the desire, ability, and willingness of consumers to purchase a product, and explains how demand is a microeconomic concept.
2) It introduces the law of demand and explains how quantity demanded varies inversely with price. Graphs of demand schedules and curves are also presented.
3) The document then discusses factors that can cause a change in quantity demanded versus a change in demand, using examples.
4) Similar concepts of supply, including the law of supply and factors that can cause a change in quantity supplied or change in supply, are then covered.
Supply Demand and Equilibrium..
Market Exchange..
Law of Supply...
Law of Demand...
Laws of supply and demand versus the “theory of supply and demand”
Laws vs. Theory of Supply and Demand..
Different types of demand..
Market Supply ..
Demand Curve..
Supply Curve..
Market Equilibrium..
Elasticity..
Own price elasticity of demand..
The Market Of Supply and Demand - EconomicsFaHaD .H. NooR
demand and supply
demand and supply curve
demand and supply graph
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market forces economics
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supply demand
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supply demand SlideShare
Its is the power point presentation on the topic demand. it includes various topics like definition of demand, factors affecting demand, law of demand, demand function, expansion-contraction,increase-decrease, price elasticity, income elasticity and cross elasticity. And it is most useful to the students who want to learn the concept of demand.
Supply Demand and Equilibrium..
Market Exchange..
Law of Supply...
Law of Demand...
Laws of supply and demand versus the “theory of supply and demand”
Laws vs. Theory of Supply and Demand..
Different types of demand..
Market Supply ..
Demand Curve..
Supply Curve..
Market Equilibrium..
Elasticity..
Own price elasticity of demand..
The Market Of Supply and Demand - EconomicsFaHaD .H. NooR
demand and supply
demand and supply curve
demand and supply graph
market force
market forces economics
market research
marketing force
supply and demand curve
supply and demand graph
supply chain management pdf
supply demand
supply demand curve
supply demand SlideShare
Its is the power point presentation on the topic demand. it includes various topics like definition of demand, factors affecting demand, law of demand, demand function, expansion-contraction,increase-decrease, price elasticity, income elasticity and cross elasticity. And it is most useful to the students who want to learn the concept of demand.
Introduction to Demand
We buy products for their utility- the pleasure, usefulness, or satisfaction they give us.
What is your utility for the following products? (Measure your utility by the maximum amount you would be willing to pay for this product)Do we have the same utility for these goods?Introduction to Demand
One reason the demand curve slopes downward is due to diminish marginal utility
The principle of diminishing marginal utility says that our additional satisfaction tends to go down as we consume more and more units.
To make a buying decision, we consider whether the satisfaction we expect to gain is worth the money we must give up.
Changes in Demand
Demand Curves can also shift in response to the following factors:
Buyers (# of): changes in the number of consumers
Income: changes in consumers' income
Tastes: changes in preference or popularity of product/ service
Expectations: changes in what consumers expect to happen in the future
Related goods: compliments and substitutes.
BITER: factors that shift the demand curve
Changes in Demand
Prices of related goods affect on demand
Substitute goods a substitute is a product that can be used in the place of another.
The price of the substitute good and demand for the other good are directly related
For example, Coke Price
Pepsi Demand
Complementary goods a compliment is a good that goes well with another good.
When goods are complements, there is an inverse relationship between the price of one and the demand for the other
For example, Peanut Butter Price
Jam Demand
Introduction to Supply
Supply refers to the various quantities of a good or service that producers are willing to sell at all possible market prices.
Supply can refer to the output of one producer or to the total output of all producers in the market (market supply).Introduction to Supply
• A supply schedule can be shown as points on a graph.
• The graph lists prices on the vertical axis and quantities supplied on the horizontal axis.
• Each point on the graph shows how many units of the product or service a producer (or group of producers) would willing sell at a particular price.
• The supply curve is the line that connects these points.
Introduction to Supply
As the price for a good rises, the quantity supplied rises and the quantity demanded falls. As the price falls, the quantity supplied falls and the quantity demanded rises.
The law of supply holds that producers will normally offer more for sale at higher prices and less at lower prices.Introduction to Supply
• The reason the supply curve slopes upward is due to costs and profit.
• Producers purchase resources and use them to produce output.
• Producers will incur costs as they bid resources away from their alternative uses.Introduction to Supply
• Businesses provide goods and services hoping to make a profit.
Profit is the money a business has left over after it covers its costs.
Businesses try to sell at prices high enough to cover it
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2. Demand
What is demand?
›The desire, ability, and willingness of
consumers to buy a product.
Demand is a microeconomic concept
›Microeconomics part of the
economy that deals with behavior and
decision making by small units
[individuals, firms]
3. Law of Demand
The quantity demanded (Q-d)for an
economic product varies inversely
with its price.
P Q-d
P Q-d
4. The Demand Schedule
A listing that shows the Q-d at all prices
that might prevail in the market at a
given time. Price Number of CDs
per CD Demanded
$ 30 0
$ 25 0
$ 20 1
$15 3
$10 5
$5 8
5. The Demand Curve
A graphic depiction of the points
corresponding to a demand schedule.
Illustrates the quantity that consumers
will demand at each and every price.
Downward sloping Price
Demand Curve
Quantity
Demanded
6. Change in Quantity-Demanded
v. Change in Demand
• Illustrated by a movement along the
Change in current demand curve
quantity- • The whole demand curve does not shift
demanded • Response to a change in the price of
the product
• Illustrated by a shift of the entire
Change in demand curve left or right
demand • Response to a change in one of the four
“non-price” determinants of
demand
7. A Change in Quantity-Demanded
Movement along the demand curve
Shows a change in the quantity of the
product purchased in response to
a change in price. Price
Example:
If the price of an I-Phone
decreases, the
Quantity
quantity-demanded of Demanded
I-phones would increase
8. Change in Demand
Changes in any of the ‘non price’ determinants of demand will cause the
entire demand curve to shift right (increase) or left (decrease).
Ex- If demand increases, the entire demand curve will shift right.
This means that at each and every price, more will be demanded (Q-d).
1. Consumer Income
2. Consumer Tastes
3. Price of Substitute Goods
4. Price of Complement Goods
9. Diminishing Marginal Utility
• Marginal Utility: extra usefulness or
satisfaction a person gets from acquiring
one more unit of a product.
• Law of Diminishing Marginal Utility
States that the extra satisfaction we
get from using additional quantities of a
product begin to diminish.
10. Recap: Food Simulation
• You got the most satisfaction
from the first food purchase.
• You get less satisfaction
from the second, and even
less from the next but
you continue to eat…
• When you reach the point where
the marginal utility does not
justify eating (i.e., you get sick),
you stop.
11. Recap: Food Simulation
• Because of diminishing satisfaction, we
would not be willing to pay as much for
the 2nd, 3rd, 4th, and so on, as we did the
first.
13. Elasticity of Demand
Demand Elasticity:
Extent to which changes in price cause
changes in the quantity-demand.
Have you ever bought a product that you
needed and the cost was not important?
- What was it?
- Why didn’t the cost matter to you?
14. Elastic versus Inelastic
DEMAND
Elastic Demand Inelastic Demand
• A given change in price • A given change in price
causes a relatively larger causes a relatively smaller
change in quantity- change in the quantity-
demanded demanded
• Example – Luxury Food • Example – Milk
15. Estimating the
Elasticity of Demand
1. Can the purchase be delayed?
2.Are adequate substitutes
available?
3. Does the purchase use a
large portion of income?
Yes to 2+ = Elastic
No to 2+ = Inelastic
16. Estimating the
Elasticity of Demand
Services of Gasoline
Determining Fresh Gasoline in
Elasticity
Table Salt Medical Milk from
Tomatoes General
Doctors SUNOCO
Can the
purchase be
delayed?
Are there
adequate
substitutes?
Does the
purchase
require a
large portion
of income?
Elastic?
Inelastic?
17. Supply
What is supply?
•The ability and willingness of
producers to offer products for sale.
›The producers (suppliers) decide
how much to offer for sale at various
prices.
›This decision depends on the cost of
producing goods/services.
18. Law of Supply
The quantity supplied(Q-s)for an
economic product varies directly with
its price.
P Q-s
P Q-s
19. The Supply Schedule
A listing that shows the Q-s at all prices
that might prevail in the market at a
given time. Price Number of CDs
per CD Supplied
$ 30 8
$ 25 7
$ 20 6
$ 15 4
$10 2
$5 0
20. The Supply Curve
A graphic depiction of the points
corresponding to a supply schedule.
Illustrates the quantity that suppliers
will supply at each and every price.
Upward sloping Price
Supply Curve
Quantity
Supplied
21. Change in Quantity-Supplied
v. Change in Supply
Change • Illustrated by a movement along the
current supply curve
in • The whole supply curve does not shift
quantity-
• Response to a change in the price of
supplied the product
• Illustrated by a shift of the entire
Change supply curve left or right
• Response to a change in one of the
in supply
eight “non-price” determinants of
supply
22. A Change in Quantity-Supplied
Movement along the supply curve
Shows a change in the quantity of the
product supplied in response to
a change in price. Price
Example:
If the price of an I-phone
increases, the
Quantity
quantity-supplied of Supplied
I-phones would increase
23. Change in Supply
1. Cost of Inputs
2. Productivity Remember:
Suppliers want to sell
3. Technology
more at a higher price
4. Taxes
5. Subsidies
6. Future Expectations
7. Government Regulations
8. Number of Sellers
24. Headliners:
Supply and Demand
• Pretend you are a writer for the local newspaper.
• Your task is to create a ‘catchy’ headline and write a brief
news article detailing a scenario that would cause a change
in supply or demand. Be sure to describe which
determinant of supply or demand your article is discussing.
• Include drawings and a S&D graph to illustrate how the
change in supply or demand would impact local consumers.
Examples of “catchy” headlines from recent news…
• “J. Crew benefits as Mrs. Obama wears the Brand”
• “Demand increasing for locally grown thanksgiving fixings”
• “Tickets! Tickets! Who’s Got Tickets?”
• “Consumer demand for small cars is here to stay”