Intro_to_Economics_Demand_Supply_3 (1) презентация

demand & supply?

time will fall as price rises and will rise as price falls, all other things being equal (ceteris paribus)”

WHY?

quantity demanded arising from the consumer becoming better or worse off as a result of the price change.

People feel poorer the purchasing power of their income has fallen

of demand arising from the consumer switching to or from alternative (substitute) products

A graph showing the relationship between the price of a good and the quantity of the good demanded over a given period of time.

Constructed on the assumption that all other things remain equal.

Other things remaining equal if the price of a good changes then there will be a movement along the demand curve.

Demand Curve

P1

P2

Q1

Q2

Quantity Demanded

Price

Change in the Quantity Demanded

change in one of the other determinants i.e. income rises a new demand curve needs to be constructed.

rise

Exceptions to this rule Inferior Goods (super market value ranges)

price of complementary goods
Income
Distribution of income
Expectations of future price changes

factors
Will cause the pattern of demand to alter
Changes in the demand curve are shown as a shift to either the right or left of the original demand curve

A change in demand can cause demand to fall at each and every price, i.e. a shift to the left
Or a change in demand can cause demand to increase at each and every price, i.e. a shift to the right.

sell, and is able to sell per unit time.

producers are willing and able to supply at various prices over a given time period

A graph showing the relationship between the price of a good and the quantity of the good supplied over a given period of time.

If the price of a good increases suppliers increase the quantity supplied.

Price

Supply Curve

Slopes upwards from left to right

Shows a direct relationship

Quantity

Movements Along The Supply Curve

A movement along the supply curve is as a result of a change in price, i.e. a change in the quantity supplied

Price

Supply Curve

P1

P2

Q1

Q2

supply
curve shifts to the right

willing to purchase is the same as the amount suppliers are willing to supply.

This point is automatically reached in a free market through the operation of the price mechanism

Price

Quantity

Equilibrium

Equilibrium - automatically
reached in a free market
- price mechanism