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The Market System
Demand and Price Determination
The Market System
• Market
A market is the set of all actual and potential buyers of
a product or service
• Demand
– the amount consumer a consumer is willing to purchase at
a given price
http://www.tutor2u.net/business/vide
ocases/videocase-tea-prices.pdf
Identify two factors affecting the demand for
tea..
Why is the price of tea rising?
What factors might affect the demand for:
Individual and Market Demand
• Market demand – consists of the sum of all
individual demand schedules
in the market
• Represented by a demand curve
• At higher prices, consumers generally willing to
purchase less than at lower prices
• Demand curve – negative slope, downward sloping
from left to right
The Demand Curve
Price (£)
The demand curve slopes
downwards from left to
right (a negative slope)
indicating an inverse
relationship between price
and the quantity
demanded. Quantity
demanded will be higher
at lower prices than at
higher prices. As price
falls, quantity demanded
rises. As price rises,
quantity demanded falls.
£10
£5
Demand
100
150
Quantity Demanded (000s)
Whiteboard time!