Demand and supply notes pdf

May not be copied, scanned, or duplicated, in whole or in part, except for use as 10 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 11 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The quantity demanded in a market is the sum of the quantities demanded by all the buyers at each price. Thus, the market demand curve is found by adding horizontally the individual demand curves. The quantity demanded in the market at this price is 7 cones. May not be copied, scanned, or duplicated, in whole or in part, except for use as 12 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 13 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 14 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Figure 3 Shifts in the Demand Curve. Any change that raises the quantity that buyers wish to purchase at any given price shifts the demand curve to the right. Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left. May not be copied, scanned, or duplicated, in whole or in part, except for use as 15 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 16 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 17 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 18 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 19 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Price of the good itself Represents a movement along the demand curve. Income Shifts the demand curve. Prices of related goods Shifts the demand curve. Tastes Shifts the demand curve. Expectations Shifts the demand curve. Number of buyers Shifts the demand curve. This table lists the variables that affect how much consumers choose to buy of any good. May not be copied, scanned, or duplicated, in whole or in part, except for use as 20 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Two ways to reduce the quantity of smoking demanded, Part 1. Shift the demand curve for cigarettes and other tobacco products 2. Try to raise the price of cigarettes. May not be copied, scanned, or duplicated, in whole or in part, except for use as 21 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Two ways to reduce the quantity of smoking demanded, Part 2 1. May not be copied, scanned, or duplicated, in whole or in part, except for use as 22 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Two ways to reduce the quantity of smoking demanded, Part 3 2. May not be copied, scanned, or duplicated, in whole or in part, except for use as 23 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. If warnings on cigarette packages convince smokers to smoke less, the demand curve for cigarettes shifts to the left. In panel a , the demand curve shifts from D 1 to D2.

By contrast, if a tax raises the price of cigarettes, the demand curve does not shift. Instead, we observe a movement to a different point on the demand curve. May not be copied, scanned, or duplicated, in whole or in part, except for use as 24 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 25 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 26 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The supply schedule is a table that shows the quantity supplied at each price. This supply curve, which graphs the supply schedule, illustrates how the quantity supplied of the good changes as its price varies.

Because a higher price increases the quantity supplied, the supply curve slopes upward. May not be copied, scanned, or duplicated, in whole or in part, except for use as 27 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 28 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The quantity supplied in a market is the sum of the quantities supplied by all the sellers at each price. Thus, the market supply curve is found by adding horizontally the individual supply curves.

The quantity supplied in the market at this price is 7 cones. May not be copied, scanned, or duplicated, in whole or in part, except for use as 29 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 30 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 31 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exhibit 7 Shifts in the Supply Curve.

Any change that raises the quantity that sellers wish to produce at any given price shifts the supply curve to the right. Any change that lowers the quantity that sellers wish to produce at any given price shifts the supply curve to the left. An individual has will and purchasing power but does not have desire to have it- Not demand. Derived and Autonomous Demand If demand for a product is determined by the demand for some parent product-Derived Demand Demand for cement depends on growth of Real Estate.

Autonomous demand is not derived -where the demand is independent of all other demands-it is somewhat difficult to identify. Derived demand….. Steel used to make utensil-consumer goods.

Market: any institution, mechanism, or arrangement which facilitates exchange. The Concept of Demand. Why demand Curve Slopes downwards? When price of X falls, the commodity becomes cheaper as compared to other commodities substitutes: Y , assuming price of Y remain constant.

Ceteris Paribus. Demand for motor- bike, pucca house, jewelry, etc. Is this theory applicable for Inferior Good? Normal commodity: If demand changes in the same direction as income. Inferior Commodity: If demand of a commodity decreases when income increases, the commodity is called inferior A.

Koutsoyiannis Ex. Demand for Bazra goes down with rise in income Does price play an active role? Giffen Goods: It is special case of inferior good. It is rare in practice. In this case income effect is positive and very strong. Law of demand does not hold good as demand curve has a positive slope.

Income effect per se is positive for normal good as income increases, more of the same commodity is demanded. But it is said that income effect is negative for normal good because we relate change in purchasing power of money income to change in price of x.

Does law of demand hold good for luxury items? Luxury for a poor can be a necessary item for a Rich Rich can afford to have luxury items even when the price is going up. Wrong perception: Higher the price better the quality. Radio is sold at cheaper rate yet people opt for TV Price Expectation: Even price falls, people expect it fall further and vice-versa Exp: Stock Market If consumers feel Price can go up further on account of likely shortage of commodity, then they prefer to purchase it at the prevailing higher price.

In contrast, expectation of glut in future leads to fall in demand in the current period. Figure 3 Shifts in the Demand Curve. Any change that raises the quantity that buyers wish to purchase at any given price shifts the demand curve to the right.

Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left. May not be copied, scanned, or duplicated, in whole or in part, except for use as 15 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 16 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 17 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 18 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 19 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Price of the good itself Represents a movement along the demand curve.

Income Shifts the demand curve. Prices of related goods Shifts the demand curve. Tastes Shifts the demand curve. Expectations Shifts the demand curve. Number of buyers Shifts the demand curve. This table lists the variables that affect how much consumers choose to buy of any good. May not be copied, scanned, or duplicated, in whole or in part, except for use as 20 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Two ways to reduce the quantity of smoking demanded, Part 1. Shift the demand curve for cigarettes and other tobacco products 2. Try to raise the price of cigarettes.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 21 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Two ways to reduce the quantity of smoking demanded, Part 2 1. May not be copied, scanned, or duplicated, in whole or in part, except for use as 22 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Two ways to reduce the quantity of smoking demanded, Part 3 2. May not be copied, scanned, or duplicated, in whole or in part, except for use as 23 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. If warnings on cigarette packages convince smokers to smoke less, the demand curve for cigarettes shifts to the left. In panel a , the demand curve shifts from D 1 to D2. By contrast, if a tax raises the price of cigarettes, the demand curve does not shift.

Instead, we observe a movement to a different point on the demand curve. May not be copied, scanned, or duplicated, in whole or in part, except for use as 24 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 25 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 26 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The supply schedule is a table that shows the quantity supplied at each price. This supply curve, which graphs the supply schedule, illustrates how the quantity supplied of the good changes as its price varies.

Because a higher price increases the quantity supplied, the supply curve slopes upward. May not be copied, scanned, or duplicated, in whole or in part, except for use as 27 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 28 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The quantity supplied in a market is the sum of the quantities supplied by all the sellers at each price. Thus, the market supply curve is found by adding horizontally the individual supply curves. The quantity supplied in the market at this price is 7 cones. May not be copied, scanned, or duplicated, in whole or in part, except for use as 29 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 30 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 31 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exhibit 7 Shifts in the Supply Curve. Any change that raises the quantity that sellers wish to produce at any given price shifts the supply curve to the right.

Any change that lowers the quantity that sellers wish to produce at any given price shifts the supply curve to the left. May not be copied, scanned, or duplicated, in whole or in part, except for use as 32 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

May not be copied, scanned, or duplicated, in whole or in part, except for use as 33 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 34 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. May not be copied, scanned, or duplicated, in whole or in part, except for use as 35 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Price of the good itself Represents a movement along the supply curve. This table lists the variables that affect how much producers choose to sell of any good. May not be copied, scanned, or duplicated, in whole or in part, except for use as 36 permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Supply and Demand Together, Part 1. Notice that an increase in demand has no effect on the supply curve.

Firms do increase production, but only in response to the higher market price. A decrease in demand, on the other hand, means that people wish to purchase less of this good at every price than before. The demand curve shifts down to the left. The equilibrium price and quantity both decrease. Again, the shift of the demand curve has no effect on the supply curve.