Download Supply and Demand

Supply and Demand
In this presentation, I will tell you
about Supply and Demand, that this
such how and when it changes.
The student of BE-11 group,
full-time tuition executed,
Artyom Naumov.
Moscow 2013
What is Demand ?
Demand is an
economic concept
that describes a
buyer's desire,
willingness and
ability to pay a price
for a specific
quantity of a good or
service. Demand
refers to how much
(quantity) of a
product or service is
desired by buyers.
Factors affecting demand
Innumerable factors and
circumstances could affect a
buyer's willingness or ability
to buy a good. Some of the
more common factors are:
• Good's own price
• Price of related goods:
• Personal Disposable Income
• Tastes or preferences
• Consumer expectations
about future prices and
income
• Population
• Nature of the good
Also there can be other reasons influencing demand. For
example, the hurricane causes great demand to drinking water,
food, construction materials, and so on.
The Law of demand
It’s when the price of a
product increases, quantity
demanded lowers; likewise, as
the price of a product
decreases, quantity
demanded increases. The law
of demand states that the
quantity demanded and the
price of a commodity are
inversely related, other things
remaining constant. If
the income of the consumer,
prices of the related goods,
and preferences of the
consumer remain unchanged,
then the change in quantity of
good demanded by the
consumer will be negatively
correlated to the change in
the price of the good.
Every law will have limitations or exceptions. While
expressing the law of demand, the assumption is that
other factors of demand, except the price of a good,
are unchanged. This law operates when the price of
the good changes and all other non-price factors do
not change.
What is Supply ?
Supply is the amount of
some product producers are willing
and able to sell at a given price all
other factors being held constant.
Usually, supply is plotted as a supply
curve showing the relationship of
price to the amount of product
businesses are willing to sell.
A supply schedule is a table which
shows how much one or more firms
will be willing to supply at particular
prices under the existing
circumstances.
Factors affecting supply
Some of the more important factors affecting
supply are the good's own price, the prices of
related goods, production costs, technology and
expectations of sellers. Innumerable factors and
circumstances could affect a seller's willingness
or ability to produce and sell a good. Some of
the more common factors are:
• Good's own price
• Prices of related goods
• Conditions of production
• Expectations
• Price of inputs
• Number of suppliers
• Government policies and regulations
The Law of supply
The law of supply is a
fundamental principle of
economic theory which states
that, all else equal, an
increase in price results in an
increase in quantity supplied.
In other words, there is a
direct relationship between
price and quantity: quantities
respond in the same direction
as price changes.
Law of supply depicts the
producer behavior at the time
of changes in the prices of
goods and services.
Economic equilibrium
Economic equilibrium is a state
where economic forces such
as supply and demand are
balanced and in the absence of
external influences the
(equilibrium) values of economic
variables will not change. For
example, in the standard textbook model of perfect
competition, equilibrium occurs
at the point at which quantity
demanded and quantity supplied
are equal. Market equilibrium in
this case refers to a condition
where a market price is
established through competition
such that the amount of goods or
services sought by buyers is equal
to the amount of goods or
services produced by sellers.
This price is often called the competitive price or market
clearing price and will tend not to change unless demand or
supply changes.
The End
Thank you for your attention