Scribd
Upload
23 views27 pages

Introduction To Demand and Supply

Uploaded by

Sarah Jhane Talagtag
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
23 views27 pages

Introduction To Demand and Supply

Uploaded by

Sarah Jhane Talagtag
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 27

INTRODUCTION TO

DEMAND AND
SUPPLY
DEMAND
Quantities of a particular good or
service consumers are willing and
able to buy at different possible
prices.
DEMAND SCHEDULE AND DEMAND CURVE

Demand schedule- is a table that shows the quantity


demanded at different prices in the market.

Demand curve- it shows the relationship between


quantity demanded and price in a given market on a graph.
EXAMPLE: DEMAND SCHEDULE FOR HIGH-QUALITY
ORGANIC BREAD:
PRICE QUANTITY DEMANDED
₱ 10.00 1000
₱ 9.00 1200
₱ 8.00 1400
₱ 7.00 1700
₱ 6.00 2000
₱ 5.00 2400
₱ 4.00 3000
₱ 3.00 3700
₱ 2.00 4500
LAW OF DEMAND
 The Law of Demand states that: the quantity demanded of good or service varies inversely
with the price.

…the
When the
quantity
price goes
demanded …the
When the down…
goes down. quantity
price goes
demanded
up…
goes up.
CHANGES IN QUANTITY DEMAND AND MOVEMENTS ALONG THE
DEMAND CURVE

A movement along the demand


curve will occur when the price
of the good changes and the
quantity demanded changes
per the original demand
relationship. In other words, a
movement occurs when a change
in the quantity demanded is
caused only by a change in price
and vice versa.
CETERIS PARIBUS ASSUMPTION

 Ceteris Paribus is used in economics that


makes economic analysis simpler.
 Ceteris Paribus means “Other things being
equal”. With regards to economics, it assumes
that other influencing factors are held constant.
CHANGES IN DEMAND AND SHIFTS IN THE
DEMAND CURVE

A shift in the demand curve


occurs when a determinant of
demand other than price
changes. It occurs when
demand for goods and services
changes even though the price
didn't.
SUPPLY
Supply is a fundamental economic concept
that describes the total amount of a specific
good or service that is available to
consumers.
SUPPLY SCHEDULE AND SUPPLY CURVE

 A supply schedule- is a table that shows the


relationship between the price of a good and the quantity
supplied.

 The supply curve- is a graphical depiction of the supply


schedule that illustrates that relationship between the price of
a good and the quantity supplied.
EXAMPLE: PRICE AND SUPPLY OF
GASOLINE
Price (per gallon) Quantity Supplied (millions of gallons)

$1.00 500

$1.20 550

$1.40 600

$1.60 640

$1.80 680

$2.00 700

$2.20 720
SUPPLY CURVE FOR GASOLINE
LAW OF SUPPLY
 According to the law of supply, the higher the price, the larger quantity produced.

SUPPLY
PRICE
PRICE
SUPPLY Quantity
As price
As price supplied
falls…
increases Quantity falls.
… supply
increases.
CHANGES IN QUANTITY SUPPLY AND
MOVEMENTS ALONG THE SUPPLY CURVE

A change in quantity supplied


is a movement along the
supply curve in response to a
change in price. A change in
supply is a shift of the entire
supply curve in response to
something besides price.
CHANGE IN SUPPLY AND SHIFTS OF
THE SUPPLY CURVE
A change in supply leads to a shift
in the supply curve, which causes
an imbalance in the market that is
corrected by changing prices and
demand. An increase in the change
in supply shifts the supply curve to
the right, while a decrease in the
change in supply shifts the supply
curve left
ELASTICITY OF DEMAND AND SUPPLY

• Elasticity of Demand, or Demand Elasticity, is


the measure of change in quantity demanded
of a product in response to a change in any
of the market variables, like price, income
etc. It measures the shift in demand when other
economic factors change.
TYPES OF ELASTICITY OF
DEMAND
• Price elasticity of demand is a calculation that measures the ratio of the percentage
change in the amount demanded of a good or service to a percentage change in its price.
• Cross elasticity of demand measures the percentage change in the quantity demanded of a
good to the percentage change in the price of a related good.
• Income elasticity of demand expresses the change in a consumer’s demand for any good
to the change in their income. It can be expressed as the ratio of the percentage change in
the quantity demanded of a good or service to the percentage change in income.
• Advertising elasticity of demand measures the expected changes in demand as a result of
a change in other promotional expenses. A good advertising campaign will result in an
increase in advertising expenditures for a company and an increase in demand for the
advertised good or service.
ELASTICITY OF SUPPLY
 It is a measure of change in supply of a
commodity due to changes in other
economic variables such as price of that
commodity, the price of related goods, cost
of production and sellers’ expectations etc.
TYPES OF ELASTICITY
SUPPLY
 Perfectly Elastic Supply
- The PES for perfectly
elastic supply is infinite,
where the quantity supplied
is unlimited at a given price,
but no quantity can be
supplied at any other price.
 Perfect Inelastic Supply
- Perfect inelastic
supply is when the PES
formula equals 0. That is,
there is no change in
quantity supplied when the
price changes.
 Unit Elastic Supply
- Unit Elastic Supply
has a PES of 1, where
quantity supplied changes
by the same percentage as
the price change.
 Perfect Inelastic Supply

- Perfect inelastic supply is when the PES formula equals 0. That is, there is no change in
quantity supplied when the price changes.
 Unit Elastic Supply

- Unit Elastic Supply has a PES of 1, where quantity supplied changes by the same
percentage as the price change.
 Relatively Elastic Supply

- A price elasticity supply greater than 1 means supply is relatively elastic, where the
quantity supplied changes by a larger percentage than the price change.
 Relatively Inelastic Supply

- The PES for relatively inelastic supply is between 0 and 1. That means the percentage
change in quantity supplied changes by a lower percentage than the percentage of price change.
 Relatively Elastic Supply
- A price elasticity
supply greater than 1 means
supply is relatively elastic,
where the quantity supplied
changes by a larger
percentage than the price
change.
 Relatively Inelastic Supply
- The PES for relatively
inelastic supply is between 0
and 1. That means the
percentage change in
quantity supplied changes by
a lower percentage than the
percentage of price change.
Thank you!
SARAH PILI TALAGTAG
Reporter

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy