DEMAND AND SUPPLY

Demand Schedule and Demand Curve Determinants Of Demand Supply Schedule and Supply Curve Determinants Of Supply Equilibrium

Demand
Demand Total quantity consumers are willing and able to buy A demand function is a behavior function for consumer. We describe market behavior with two functions1. Direct Demand demand for consumption goods i.e. goods and services that satisfy consumer desires.

Derived Demand demand that is derived from the demand of other goods. Quantity Demanded amount of good and services that consumers are willing and able to buy at a given price over a period of time. Law of Demand other things being equal quantity demand of a good fall as price rises and rise as price fall

Demand Schedule
PRICES 4 8 12 16 20 QUANTITY 28 15 5 1 0

Demand schedule shows different quantities of goods that consumer can buy at various prices. Normally prices and quantity demanded moves in opposite directions.

Demand Curve : curve showing relationship between quantity demanded and prices of a good.

Demand function

It is a relationship between various independent variables and dependent variables. Q= F(P) where Q is quantity and P is price.

Determinants Of Demand
Consumer taste and preferences Price of substitute goods Price of complementary goods Consumer income The distribution of income Expectations of future price changes Prices of own good.

Shift of the Demand Curve

A change in demand curve is reflected by the shift of the demand curve and is caused by any of the non-price determinants of the demand

a change in quantity demanded is however reflected in a movement along the demand curve.

Supply
The quantity supplied is the number of units that seller wants to sell over a specified period of time at a particular price. Law of supply states that other things remaining unchanged the supply of a good increases as its price increases. This can be shown by supply schedule.

Supply Schedule
Price 1 5 8 13 20 Quantity 2 10 15 25 35

There exists a positive relationship between price and quantity.

Supply Curve

Supply Function shows relationship between quantity supplied and price of a commodity.

Determinants of supply

Price Cost of Production Technological progress Prices of related products Government policies

All factors other than price of the good cause a shift in the supply curve and is called change in the demand curve.

Equilibrium

equilibrium is determined by the interaction of the demand curve and the supply curve.

THANK YOU