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8/11/2019 Demand and Supply Analysis-1 sdsakldjlasjldjlasldlasjldjklasdjasljdljasldjlaskldasljdlasjlkl
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Demand and Supply Analysis
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What is demand?
It is the quantity which consumers are ableand willing to buy at various prices duringa given period of time.
D = f (P)
D = f (Px, Pr, Y, T)
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Types of Demand
Demand for Consumers Goods and
Producers Goods Demand for Perishable and Durable
Goods Derived and Autonomous Demand
Industry and Company Demand Short-run and Long-run demand Joint and Composite Demand
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The Law of Demand
The law of demand holds that other thingsequal, as the price of a good or servicerises, its quantity demanded falls. The reverse is also true: as the price of a
good or service falls, its quantity demandedincreases.
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Demand Schedule
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Demand Curve
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Demand Curve
The demand curve has a negative slope,consistent with the law of demand.
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Causes of a Downward SlopingDemand Curve
Law of diminishing marginal utility Increase in consumer base
Increase in real income Substitution effect Putting a product to more uses
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Exceptions to the Law of Demand
War Depression
Giffen Paradox Demonstration effect Necessities of life
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Determinants of Demand
Price Income
Tastes Prices of related goods Advertisements
Spending habits Growth of population
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Determinants of Demand
Standard of living Social Customs
Future expectations Tax rate Availability of credit
Pattern of savings Demonstration effect
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Supply Schedule
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Supply Curve
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Supply Curve
The supply curve has a positive slope,consistent with the law of supply.
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Equilibrium
In economics, an equilibrium is a situationin which: there is no inherent tendency to change, quantity demanded equals quantity supplied,
and the market just clears.
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Equilibrium
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Equilibrium
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Equilibrium
Equilibrium occurs at a price of $3 and aquantity of 30 units.
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Shortages and Surpluses
A shortage occurs when quantitydemanded exceeds quantity supplied. A shortage implies the market price is too low.
A surplus occurs when quantity suppliedexceeds quantity demanded. A surplus implies the market price is too high.
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Shift in the Demand Curve
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Shift in the Demand Curve
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Shift in the Demand Curve
This demand curve has shifted to the right.Quantity demanded is now higher at anygiven price.
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Equilibrium After a Demand Shift
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Shift in the Supply Curve
A change in any variable other than pricethat influences quantity supplied producesa shift in the supply curve or a change insupply.
Factors that shift the supply curve include: Change in input costs Increase in technology Change in size of the industry
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Shift in the Supply Curve
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Equilibrium After a Supply Shift
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Equilibrium After a Supply Shift
The shift in the supply curve moves themarket equilibrium from point A to point B,resulting in a higher price and lowerquantity.
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Extension and Contraction of demand(change in quantity demanded or movement
along the demand curve)