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DEMAND Definition The Law Of Demand Assumption Demand Curve Determinants Of Demand
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SUPPLY Definition Law Of Supply Assumptions Supply Curve Determinants Of
Supply
Conclusion
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Definition:
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The law of demand holds that other things equal, as the price of a good or service rises, its quantity demanded falls.
– The reverse is also true: as the price of a good or service falls, its quantity demanded increases.
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Income Remain Constant
Price of related good should not change
No changes in future expectation
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Number of Bottles per Month
Price per Bottle
A
When the price is $4.00 per bottle, 40,000 bottles are demanded (point A).
B
At $2.00 per bottle, 60,000 bottles are demanded (point B).
40,000 60,000
$4.00
2.00
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Change In Taste And Fashion.
Changes In Income.
Changes In Weather.
Changes In Population.
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Supply is the quantity of output brought for sale in the market at a certain price
Definition:
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If nothing else changes, firms are willing to supply a greater quantity of good or service at higher prices than lower.
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Constant cost of production
Constant price of capital goods
Constant technology
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Number of Bottles per Month
Price per Bottle When the price is $2.00
per bottle, 40,000 bottles are supplied (point F).
At $4.00 per bottle, quantity supplied is 60,000 bottles (point G).
40,000 60,000
$4.00
2.00
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Change In Production Cost.
Change In Agriculture Output.
Development And Order Situation In The Country.
Law And Order Situation In The Country.
To optimize equilibrium point it a corroboration is necessary between demand and supply.
Demanding the supply or supplying the demand is the key of growth in the market economy.
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