Demand Supply Analysis

Demand-Supply Analysis


Meaning of Demand Demand – Want – Need – concept of terminology in

economics (specialized meaning) ;

Prevalence of 3 conditions: Desire to acquire,Desire to acquire,Ability to pay;Willingness to pay.

One of two market forces

Applied (operational Meaning) : Relationship between Price of product & Quantity demanded.

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Meaning of DemandRelationship between Price of product & Quantity

demanded.Demand Schedule/table,

Demand Curve,Demand Curve,

Demand Function/ equation.

Different types of Demand : Firm and industry demands.

Demand for consumers’ goods and producers’ goods,

Demand for perishable and durable goods,

Derived and autonomous demands.

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• Law of Demand`Other things remaining the same, as the price of a commodity falls, demanded quantity rises or vice versa.’

Exceptions: shortage is feared, Luxury item, Ignorance,Necessity,out of fashion.

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• Slope of the demand curve:

law of diminishing marginal utility,

income effect,

substitution effect, substitution effect,

less urgent uses .

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Meaning of Supply

Terminology in economics, Stock & Supply ;

Ready to sell Ready to sell

One of two market forces

Applied (operational Meaning) : Relationship between Price of product & Supplied Quantity.

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Meaning of Supply

Supply table – curve -function ;

Law of Supply Law of Supply

Exceptions:

unique items

supply of labour

price of agricultural products

sellers’ expectation

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Concept of Equilibrium

where supply meets demand;

Equilibrium price & market price.

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Changes in equilibrium: movement vs. shift

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Determinants of Demand & Supply

Determinants of Demand Determinants of Supply

1. Price of the commodity or service,

2. Consumers’ income,3. Prices of related goods or

services,

1. Price of the commodity or service,

2. Costs of the various factors of production,

3. Improved techniques of services,4. Consumer tastes and

preferences,5. Population and its

distribution.6. Consumers’ expectations (in

case of durable goods).7. Weather

3. Improved techniques of production,

4. Improvement in the means of transport and communication,

5. Number of Sellers, 6. Goals set by the producing

firms,7. Weather.

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• Regulated Price: Price ceiling & Price Floor

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Demand Supply Analysis

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