DEMAND

Demand for a commodity refers to the quantity of a commodity which a individual household is willing to buy at a particular price. -Desire to acquire it -willingness to pay -ability to pay

DETERMINANTS OF DEMAND
1) Income of a Consumer 2) Products own price 3) Price of a substitute product. 4) Price of complementary Product. 5) Changes in Policy. 6) Taste and preference. 7) Climate/Seasonal Variations.

THE LAW OF DEMAND

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.

The Law of Demand has an INVERSE RELATION.

DEMAND FUNCTION

Demand function is a mathematical function showing relationship between the quantity demanded of a commodity and the factors influencing demand.

Dx = f (Px, Py, T, Y, A, Pp, Ep, U. )

THE DEMAND

SCHEDULE

The demand schedule is a table that shows the relationship between the price of the good and the quantity demanded

DEMAND CURVE

Demand curve is a diagrammatic representation of demand schedule. It is a graphical representation of price- quantity relationship.

SHIFT IN DEMAND CURVE

MOVEMENT ALONG THE DEMAND CURVE.

Caused Due to Change in price.

1)Extension of Demand curve- Demand of a product increases due to fall in price. 2)Contraction of Demand curve- Demand of a product increases due to a rise in Price.

MAJOR DIFFERENCE B/W SHIFTS AND MOVEMENTS

Movement along demand curve is the change in the point of demand curve.
Shift in demand curve is the change in the whole demand curve.

DEGREE OF PRICE ELASTICITY OF DEMAND

Perfectly elastic Demand. 2) Perfectly inelastic Demand. 3) Unitary elastic Demand. 4) Relatively elastic Demand. 5) Relatively in elastic Demand.
1)

SUPPLY

Quantity Supplied refers to the amount (quantity) of a good that sellers are willing to make available for sale at alternative prices for a given period.

THE LAW OF SUPPLY

The

law of supply holds that other things equal, as the price of a good rises, its quantity supplied will rise, and vice versa. Why do producers produce more output when prices rise?

They seek higher profits They can cover higher marginal costs of production

There

is a direct Relationship b/w price and quantity supplied.

THE SUPPLY SCHEDULE AND THE SUPPLY CURVE

The supply schedule is a table that shows the relationship between the price of the good and the quantity supplied. The supply curve is a graph of the relationship between the price of a good and the quantity supplied.

THE SUPPLY SCHEDULE AND THE SUPPLY CURVE

SUPPLY AND DEMAND TOGETHER

Equilibrium refers to a situation in which the price has reached the level where quantity supplied equals quantity demanded.

AFFECTS TO EQUILIBRIUM DUE TO CHANGE IN DEMAND

1)

How an Increase Demand Affects the Equilibrium

How a Decrease Demand Affects the Equilibrium

2)

HOW AN INCREASE DEMAND AFFECTS THE EQUILIBRIUM

HOW A DECREASE DEMAND AFFECTS THE EQUILIBRIUM

- Julius