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    Demand & Supply

    Uploaded by

    Hani
    This document discusses demand, supply, and market equilibrium. It defines demand as the willingness to buy goods and services, and supply as how much the market can offer. It explains the laws of demand and supply - that demand decreases as price increases, and supply increases as price increases. Demand and supply curves are shown for cookies. The document discusses shifts in demand and supply curves from changes in factors like income, tastes, and input prices. Equilibrium price and quantity are defined as the point where supply meets demand, and shortages or surpluses can occur when supply and demand are not equal.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Demand & Supply

    Uploaded by

    Hani
    415 views11 pages
    This document discusses demand, supply, and market equilibrium. It defines demand as the willingness to buy goods and services, and supply as how much the market can offer. It explains the laws of demand and supply - that demand decreases as price increases, and supply increases as price increases. Demand and supply curves are shown for cookies. The document discusses shifts in demand and supply curves from changes in factors like income, tastes, and input prices. Equilibrium price and quantity are defined as the point where supply meets demand, and shortages or surpluses can occur when supply and demand are not equal.

    Original Description:

    Chapter 2

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    © © All Rights Reserved

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    This document discusses demand, supply, and market equilibrium. It defines demand as the willingness to buy goods and services, and supply as how much the market can offer. It explains the laws of demand and supply - that demand decreases as price increases, and supply increases as price increases. Demand and supply curves are shown for cookies. The document discusses shifts in demand and supply curves from changes in factors like income, tastes, and input prices. Equilibrium price and quantity are defined as the point where supply meets demand, and shortages or surpluses can occur when supply and demand are not equal.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    415 views11 pages

    Demand & Supply

    Uploaded by

    Hani
    This document discusses demand, supply, and market equilibrium. It defines demand as the willingness to buy goods and services, and supply as how much the market can offer. It explains the laws of demand and supply - that demand decreases as price increases, and supply increases as price increases. Demand and supply curves are shown for cookies. The document discusses shifts in demand and supply curves from changes in factors like income, tastes, and input prices. Equilibrium price and quantity are defined as the point where supply meets demand, and shortages or surpluses can occur when supply and demand are not equal.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    Demand

    &
    Supply
    NUR ILHANI BINTI AB HALIL

    Introduction
    Demands

    Supply

    Willingness and desire of How much the markets


    consumers to buy
    can offer, over a specific
    products or services
    time period

    Law of Demand
    The inverse relationship of the price and quantity
    demanded, while all other variables remain constant
    (ceteris paribus).

    If P is high, the Q
    demand decreases
    and if the P
    decreases, then the
    Q demand will
    increase

    Demand Curve- Cookies


    [Famous Amos]

    Price

    Cookies

    30

    Price

    Quantit
    y
    Deman
    ded

    RM25

    20

    RM20

    40

    RM15

    60

    RM10

    80

    RM5

    100

    25
    20
    15
    10
    5
    0
    20

    Quantity
    40

    60

    80

    100

    Changes in Demand
    vs.
    Changes in Quantity
    Demanded
    Demand
    A shift in the demand
    curve (Left or right).
    Quantity Demanded
    A movement along the
    demand curve (up or
    down). A change of
    quantity demanded occurs
    on the same demand
    curve.

    Price

    S
    P2

    P1
    D2
    D1
    Q1

    Q2

    Quantity

    Law of Supply
    increase in market price will result in
    an increase in the quantity supplied,
    all other factors held constant
    (including cost of production)
    If P is high, the Q demand will be
    increased

    Supply Curve Cookies


    [Famous Amos]
    Quantity supplied moves in the same
    direction as price.
    Thesupplycurve is an upward sloping curve.
    Producers are willing to increase production
    at higher prices to increase profit.
    Price
    30
    25
    20
    15
    10
    5
    0
    20

    Cookies

    40

    60

    80

    100

    Quantity

    Price

    Quantit
    y
    Deman
    ded

    RM5

    20

    RM10

    40

    RM15

    60

    RM20

    80

    Shifts in Demand Curve


    Price

    Increase in Demand

    The market does not have to stay


    fix all the time
    changes in demand curve by
    shifting in or shifting out
    D

    Determinants of Demands:

    D
    1

    Quantity

    Pric Decrease in Demand


    e

    D
    1

    D
    o

    Quantit
    y

    in income
    (normal/inferior)
    2.
    in taste/preferences
    3.
    in expectations
    4.
    in market size
    (population)
    5.
    in price of related goods
    (substitutes /
    complements)
    1.

    Shifts in Supply Curve


    * Changes in supply shifts in the supply curve

    Increase in Supply
    Price

    S
    o

    S1

    Determinants of Supply/Supply Shifters

    Quantity
    Price

    S1

    S
    o

    Decrease in Supply

    Quantity

    1.
    2.
    3.
    4.
    5.

    in technology
    in input prices
    in expectations
    in number of producers
    in price of related goods
    (substitutes /
    complements)

    The Market for Famous Amous Cookies


    Equilibrium Prices & Quantity

    Price

    Supply Curve (So)

    Eq. point is where demand and supply meet.


    Demand=Supply

    P*

    Shortage: Quantity demanded is higher


    than the available supply

    Demand Curve (Do)

    Surplus: excess of production or supply over


    demand

    Quantity

    q*

    Price

    Price

    Surplu
    s

    Supply Curve (So)

    Supply Curve (So)

    P high
    P*

    P*

    P low

    P low

    Shorta
    ge

    Demand Curve (Do)


    q.s
    low

    q*

    q.d
    low

    Quantity

    q.s
    low

    Demand Curve (Do)

    q.d
    low

    Quantity

    Conclusion
    prices automatically move up and
    down to ensure that there is enough
    supply to meet demand, and enough
    demand to meet supply.
    the price is not based on how much it
    costs to get the product to market, it is
    entirely dependent on how much supply
    there is and how much demand

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