On Kellogg's Cornflakes

Demand refers to the quantities of a commodity that the consumers are able and willing to buy at each possible price during a given period of time, other things being equal.
For e.g., A consumer demands 2kg of sugar in a month at the price of Rs. 20 per kg. This is a complete example of demand for a commodity as it has all the three components of demand- quantity, price and time.

Main features of demand for a commodity are:1. Demand is always with reference to a specific price. 2. Demand is a flow of quantities bought in a given period of time. 3. Consumer should have a desire and necessary purchasing power to buy the commodity. 4.Consumer should be willing to pay for the commodity.

The Demand function may be expressed symbolically

as
Q=f (P, Pr ,Y,T,E,O) Where Q stands for the quantity demanded of the Commodity, P for the price of the commodity, Pr for prices of related goods, Y for income of the consumer, T for tastes and preferences of the consumer, E for the expectations for the future prices and O stands for the other factors

So the Demand of Kellogg's cornflakes that includes Price of the product Substitutes-local brands with less cost Income of the consumer Tastes and preferences And so many other factors -The Demand function of Kellogg's is given by: Q=f(Price of cornflakes, local brands, income, tastes and preference and other factorsflavour likes honey, wheat)

The law of demand explains the relationship between two variables- price of the commodity and the quantity of the commodity demanded, other things being constant

Symbolically,
Dx = f(Px)

Where Dx = demand of x commodity Px = price of x commodity

The numerical tabulation of the law of demand is called the demand schedule. Following table shows a hypothetical demand schedule for Kelloggs Cornflakes
Price(Rs per Kg) 30 40 50 60 (current price) Quantity Demanded( Kg per Month 4 3 2 1

The demand schedule shows an inverse relationship between price and the quantity demanded. The consumer is willing to pay 60 rupees per kg to buy 1 kg of cornflakes each month. If the price reduces by 30 rupees , he/she would be willing to buy an additional one or two kg per month and so on. This implies that lower the price more will be the demand and vice versa.

Demand Curve
The graphical representation of the demand schedule is called a demand curve. The Demand curve for Kelloggs cornflakes is drawn which shows different quantities of cornflakes demanded at different prices in a month

 A downward sloping or negatively sloped demand curve relates quantity demanded to price.

According to Prof. Thomas, The supply of goods is the quantity offered for sale in a given market at a given time at various prices.

Thus the supply is defined as the total quantity of a commodity

that a seller is willing to produce and sell at a given price, during a given period.

Typically involves the terms on which businesses produce and sell

their products.

Supply of a commodity is determined by various

factors. Supply function is a functional relationship

between quantity supplied of a commodity and factors affecting it. Supply function can be written

as
Sx =f (Px,Pr,T,F,Gp) Where Sx= Supply of commodity X, f=function of, Px =price of commodity X, Pr= Price of related commodity, T= technology, F=prices of factor inputs Gp =Government policy

So the supply of Kellogg's cornflakes that includes Price of the commodity Technology they are using Price of related commodities and Government policies- Taxes
So

the supply of Kelloggs cornflakes is given

by S=f(Price, Price of other Substitutes, Technology, Govt policies)

As the price of a good increases, suppliers will attempt to maximize profits by increasing the quantity of the product sold. Or All other factors being equal, as the price of a good or service increases, the quantity of goods or services offered by suppliers increases and vice versa.

The numerical tabulation of the law of supply is called the supply schedule. Following table shows a hypothetical supply schedule for Kelloggs Cornflakes
Price (Rs per Box) 60 Quantity supplied(Boxes per year) 40

50
40 30

30
20 10

The supply schedule for cornflakes shows that at a price of cornflake box of 30, only 10 boxes will be produced in an year. At such a low price, breakfast manufacturers might want to devote

their factories to producing other types of cereal, like bran flakes,

that earn them more profit than cornflakes. So , as the price of cornflakes increases, even more cornflakes will be produced . Supply curve The graphical representation of the Supply schedule is called a

Supply curve. The Supply curve for Kelloggs cornflakes is drawn

which shows different quantities of different prices. cornflakes supplied at

Diagrammatic representation
Supply curve or Supply schedule relates quantity Supplied to Price

Prepared
By AN IL KUMAR.K