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    The Law On Supply and Demand

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    Arjay Nams
    The document summarizes the key concepts of supply and demand, including: 1) The law of demand states that quantity demanded decreases as price increases, as higher prices reduce what consumers are willing and able to buy. 2) The law of supply states that quantity supplied increases with price, as higher prices make producers more willing to supply goods to the market. 3) Equilibrium occurs when supply and demand are equal, where the quantity supplied equals quantity demanded at the equilibrium price that satisfies both consumers and producers.

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    The Law On Supply and Demand

    Uploaded by

    Arjay Nams
    72 views2 pages
    The document summarizes the key concepts of supply and demand, including: 1) The law of demand states that quantity demanded decreases as price increases, as higher prices reduce what consumers are willing and able to buy. 2) The law of supply states that quantity supplied increases with price, as higher prices make producers more willing to supply goods to the market. 3) Equilibrium occurs when supply and demand are equal, where the quantity supplied equals quantity demanded at the equilibrium price that satisfies both consumers and producers.

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    The Law on Supply and Demand

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    The document summarizes the key concepts of supply and demand, including: 1) The law of demand states that quantity demanded decreases as price increases, as higher prices reduce what consumers are willing and able to buy. 2) The law of supply states that quantity supplied increases with price, as higher prices make producers more willing to supply goods to the market. 3) Equilibrium occurs when supply and demand are equal, where the quantity supplied equals quantity demanded at the equilibrium price that satisfies both consumers and producers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    72 views2 pages

    The Law On Supply and Demand

    Uploaded by

    Arjay Nams
    The document summarizes the key concepts of supply and demand, including: 1) The law of demand states that quantity demanded decreases as price increases, as higher prices reduce what consumers are willing and able to buy. 2) The law of supply states that quantity supplied increases with price, as higher prices make producers more willing to supply goods to the market. 3) Equilibrium occurs when supply and demand are equal, where the quantity supplied equals quantity demanded at the equilibrium price that satisfies both consumers and producers.

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    © All Rights Reserved
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    THE LAW ON SUPPLY AND DEMAND

    Prepared by : Arjay E. Nambatac


    DEMAND refers to how much (quantity) of a product or service is desired by the buyers.
    SUPPLY represents how much the market can offer to the consumers.
    A. THE LAW OF DEMAND
    The law of demand states that, if all other factors remain equal,the higher the price of a good,the less
    people will demand that good. In other words,the higher the price,the lower the quantity demanded.The
    amount of good that buyers purchase at a higher price is less because as the price of a good goes up,so
    does the opportunity cost of buying that good.As a result,people will naturally avoid buying a product
    that will force them to forgot the consumption of something else they value more.
    B. THE LAW OF SUPPLY
    Like the law of demand,the law of supply demonstrates the quantities that will be sold at a
    certain price.But unlike the law of demand,the supply relationship shows an upward slope.This
    means that the higher the price,the higher the quantity supplied.Producers supply more at a
    higher price because selling a higher quantity at a higher price increases revenue.
    C. THE SUPPLY AND DEMAND RELATIONSHIP
    The relationship between demand and supply underlie the forces behind the allocation of
    resources.In Market Economy Theories,demand and supply theory will allocate resources in the
    most effective way possible.
    D. EQUILIBRIUM
    When supply and demand are equal(i.e. when the supply function and demand function intersect
    graphically) the economy is said to be at the equilibrium. At this point,the allocation of goods is
    at its most efficient because the amount of goods being supplied is exactly the same as the
    amount of goods being supplied is exactly the same as the amount of goods being
    demanded.Thus everyone is satisfied with the current economic condition.At the given
    price,suppliers are selling all the goods that they have produced and consumers are getting all
    the goods that they are demanding.
    E. DISEQUILIBRIUM
    Excess demand and Excess Supply
    F. SHIFT AND MOVEMENTS
    Movement refers to a change along a curve.
    Shifts A shift in demand or supply curve occurs when a goods quantity demanded or supplied changes
    Even though the price remains the same.
    G. Price Floor and Price Ceiling
    Demand schedule and Demand Curve
    Demand Function Mathematical Concept that shows the relationship of price and quantity demanded.
    Qd = f(p) : Qd = a bP where Qd is Quantity demanded and P is Presyo.
    A= intercept (Qd if the price is 0) b= slope= Qd/P
    Supply Schedule and Supply Curve
    Supply Function one way of showing the relationship of price and quantity supplied is through supply function.
    Qs= f(P) ; Qs=c+bP where Qs=QuantitySupply P= presyo C= intercept(Qs when price is O) d=slope=Qs/d
    Price per piece Quantity Price per piece Quantity
    demanded Supplied
    5 10 5 50
    4 20 4 40
    3 30 3 30
    2 40 2 20
    1 50 1 10
    0 60 0 0
    A. Demand Schedule Supply Schedule
    H. Equilibrium price and Equilibrium Quantity

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