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Demand and Supply
Demand refers to the want, ability and willingness to pay
for a good, so it is a plan of purchase.
The Law of Demand states that in a given period of time,
when the price of a good increases (decreases), the
quantity demanded decreases (increases), ceteris paribus.
Change in Quantity Demanded
A change in quantity demanded refers to a change in
the amount of the good demanded because of a change
in PRICE. This is represented but the movement along
the SAME demand curve.
P
Increase case
(vice versa)
P1
P0
Q
Q1
Q0
Change in Demand
A change in demand refers to a change in the amount of
goods demanded by the people even though the price of
the good is the same. This is represented by the shifting
of the whole demand curves.
Increase case
P
(vice versa)
D
D”
Q
Supply for a good refers to the quantities a producer is willing
and able to sell at given prices over a period of time, ceteris
paribus(ie holding all the other factors constant).
The Law of Supply states that in the given period of time,
when the price of a good increases(decreases), the quantity
supplied increases(decreases), ceteris paribus. (ie P↑Qs↑or
vice versa).
Change in Quantity Supplied
A change in quantity supplied refers to a change in the
amount of the goods supplied because of a change in
PRICE. This is represented by the movement along the
SAME supply curve.
P
S
Increase case
(vice versa)
P1
P0
Q
Q0
Q2
Change in Supply
A change in supply refers to a change in the
amount of goods supplied by the people even
though the price of the good is the same. This is
represented by the shifting of the whole supply
curve.
P
Increase case
S
S’
(vice versa)
Q
Suppose the government
punishes both the sellers and
buyers of illegal VCD. It may
effect the supply and demand of
the VCD. Thus, the market price
is changed.
When it happens, either the supply curve and the demand curve will shift to
the left, because there is a decrease in them. The equilibrium price may
increase, decrease or no change, depending on the percentage change of the
demand and supply.The quantity transacted will decrease for all the cases.
P
S’
S
P
D
D’
Q
Q1
Q0
Market for
illegal VCD
Carol Cheung (4)
Mavis Chu (6)
Nicole Hui (8)
F.4A
Annie Yeung (39)