Demand and supply

DEMAND AND SUPPLY

PREPARED BY:

VINOD SOLANK

STD = X

ROLL =43

• Quantity of commodity buyers are willing to buy

• Behavior of buyers• Relationship between

• Quantity demanded of a good• Price• Holding other factors constant

Demand

• Amount of good or service• Per unit of time• The amount of goods which would be

demanded at a particular price.

Quantity Demanded

Demand Schedule

• List of Qd at each price• table of the quantity demanded of a

good at different price levels• table that lists the quantity of a good

all consumers in a market will buy at every different price

Demand Schedule

Price Quantity Demanded

1 52 43 34 25 1

Demand Curve

• Graph of demand schedule• A graphic representation of the

relationship between the price of a commodity and the quantity demanded

• Has negative slope

Demand Curve

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Quantity demanded

Price

Law of Demand

• As the price (P) increases the quantity demanded (Qd) decreases

• As the price (P) decreases the quantity demanded (Qd) increases

Factors Affecting Demand• Income

• If income decreases demand for such goods and services also declines

• Purchasing power of individuals• Normal goods- increase in income =

increase in demand• Inferior goods- increase in income =

decrease in demand

• Buyer expectation• Expected change in

• Future income• Future prices

• No. of buyers/ consumers• More people = more demand for goods

and services• demographics

• Preferences and taste• Trend• Change in technology• Something you want• Likes and dislikes

• Prices of related goods• When the price of a certain product increases,

people tend to buy a substitute product• In the case of complementary goods, if the

price of one good increases the demand the demand for the other goods decreases

Change in Demand

• Other factors affecting demand changes• Either shift to the RIGHT• Or shift to the LEFT

Shifting of the curve to the right

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Quantity demanded

Price

Shifting of the curve to the left

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Quantity demandedColumn1

Price

Change in Quantity Demanded

• Movement along the curve• Theres a change in price and holding

other factors constant

Shifting along the curve

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Quantity demanded

Price

Supply

• Amount of goods and services sellers are willing to sell or supply in the market

• The amount of a resource that is available

Law of Supply

• As the price(P) increases quantity supplied (Qs)also increases

• And as the price (P) decreases the quantity supplied (Qs)also decreases

Supply schedule

Price Quantity supplied1 12 23 34 45 5

Supply Curve

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Quantity supplied

Price

Factors Affecting Supply

• Cost of inputs• These are the raw materials needed in

producing goods• Prices of related goods

• Changes in price of goods have effects in the supply of such goods

• Seller expectation• Expect to rise very soon = keep the goods then

releases when prices are already high

• No. of sellers• More sellers or more producers = increase in

supply• Less sellers or less producers = decrease in

supply• Productivity

• Output• Increase in output lowers cost• Cause:

• Technology• Human capital

Change in Supply

• Other factors affecting supply change• If it increases shift to the RIGHT• If it decreases shift to the LEFT

Change in Supply

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Quantity suppliedColumn1

Price

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Quantity suppliedColumn1

Price

Change in Quantity Supplied

• When price change holding other factors constant• Movement along the curve

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Quantity supplied

Price

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