Scribd
Upload
171 views11 pages

Fundamentals of Economics - Chapter 2

Uploaded by

Alya Syakirah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
171 views11 pages

Fundamentals of Economics - Chapter 2

Uploaded by

Alya Syakirah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 11

CHAPTER

2
DEMAND AND SUPPLY
LEARNING OUTCOMES

At the end of the chapter, you should be able to:


 Describe all types of goods.
 Explain the definition of demand, law of demand, individual
demand, and market demand.
 Differentiate between change in quantity demanded, change
in demand, the determinants of demand, and exceptional
demand.
 Explain the definition of supply, law of supply, individual
supply, and market supply.
 Differentiate between change in quantity supplied, change in
supply, the determinants of supply, and exceptional supply.

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 3
CLASSIFICATION OF GOODS

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 4
DEMAND, LAW OF DEMAND,
INDIVIDUAL DEMAND, AND MARKET
DEMAND
 Demand is defined as the different quantities of goods or services
which buyers are willing and able to buy at different possible prices
in a given period of time, ceteris paribus.
 Individual demand—this refers to the demand of goods and
services from a single consumer.
 Market demand—this is a horizontal summation of all the
individual demand in a particular market.
 The law of demand states that when the price of a good itself
increases, the quantity demanded for the good will fall and when
the price of the good decreases, the quantity demanded will
increase.

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 6
DEMAND, LAW OF DEMAND,
INDIVIDUAL DEMAND, AND MARKET
DEMAND (cont.)
 The relationship between the individual demand and
market demand is illustrated as below:

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 7
MOVEMENT ALONG A DEMAND
CURVE VERSUS SHIFT OF A DEMAND
CURVE

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 8
DETERMINANTS OF DEMAND

 Price of the good itself (movement along a demand


curve)
 Consumers’ preferences
 Consumers’ income
 Number of potential consumers/Market size
 Changes in the prices of related goods and services
 Consumers’ expectations of future prices
 Socio and economic conditions

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 9
SUPPLY, LAW OF SUPPLY, INDIVIDUAL
SUPPLY, AND MARKET SUPPLY (cont.)

Individual Supply and Market Supply

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 13
CHANGE IN QUANTITY SUPPLIED AND
CHANGE IN SUPPLY

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 14
DETERMINANTS OF SUPPLY

 Price of the good itself (movement along a supply


curve)
 Cost and availability of the factors of production
 Changes in the prices of related goods
 Level of technology
 Government or economic policy
 Producers’ expectations of future prices
 Number of suppliers

Fundamental of Economics All Rights Reserved


© Oxford Fajar Sdn. Bhd. (008974-T), 2017 2– 15

You might also like