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DEMAND _ SUPPLY by xiuliliaofz

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									   DEMAND &
    SUPPLY
     “In a market system which
    allocates resources between
different uses, the pricing system is
     an important link between
     consumers and producers”
                     Demand
   The willingness and ability to pay for a particular
    commodity or service.
   Demand Schedule:- a table showing the quantity
    of a commodity demanded at various price
   Demand Curve:- shows the relationship between
    the price of a commodity, service or resource
    and the quantity which consumers are willing to
    buy
Demand Schedule
Demand Curve
              Law of Demand
   Increase Price, demand reduces and vice versa
   Use the graph below to identify this law
    Shifts in Market Demand Curve
   Income of Consumer

   Tastes and Preferences

   Substitutes good

   Complementary goods
                      Supply
   The willingness of suppliers to supply goods and
    services at different price level.
   Supply Schedule:- a table showing the quantities
    of a commodity supplied at various prices
   Supply curve:- a curve relating price per unit of
    a commodity to the quantity a producer willingly
    supplies
Supply Schedule
Supply Curve
                   Law of Supply
   If prices are high
    producers are willing to
    supply a relatively large
    quantity of goods &
    services
         Shift in the Supply Curve
   Cost of production
   Technology
   Prices of other goods
               Change in Prices
   This will cause a movement along the demand and
    supply curve
Market Equilibrium
Disequilibrium Situation
Application Of Demand &Supply
   due to Exogenous Forces
   Exogenous forces – are the result of actions
    involving demand and supply analysis but not
    originating in it.
   These changes distort equilibrium situation;
    include, price control, and the placing of taxes
    and subsidies on goods passing through the
    market
    Price Ceiling: Maximum Price
                Control
   Set by Gov’t in the interest of those in the lower
    income groups on items of mass consumption.
   It is set below the market equilibrium.
   It will cause excess demand, but suppliers
    willingness to supply to provide adequate supply
    will be hindered
   Can lead to the increase in “Black Market”
      Price Floor: Minimum Price
                Control
   Prices are set above market equilibrium and are
    regulated from adjusting downwards.
   Cause excess supply, suppliers finds it profitable
    to supply more while consumers will find it
    expensive
                            Tax
   Taxes are imposed by
    Gov’t for revenue
    purposes, but it will have
    the effect of distorting
    market equilibrium.
            Change in Demand
   Change in taste and fashion
   Change in income
   Change in the price of substitutes
             Change in Supply
   Technology
   Lower cost of production
   Time
   Natural Disaster
   New method of production.
   Government Policy, Tax, Subsidies
END   OF LECTURE

								
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