DEMAND AND SUPPLY

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By: cristina.tomasi (7 month(s) ago)

fantastic lesson thank you very much! Cristina

By: cskrishnakumar (34 month(s) ago)

Exellent.Very useful for both students and teachers

By: johndvillaver (36 month(s) ago)

what of great help not only to teachers but to students as well

By: kanishkasantoshpan (43 month(s) ago)

very good presentation elaborative & explanatory . thanks

By: krisha_emie (46 month(s) ago)

this is very helpful in my class thank you so much..

Presentation Transcript

Demand & Supply : 

Demand & Supply Edited By :- Krishan Jangra

MARKETS DEFINED : 

MARKETS DEFINED MARKETS

DEMAND DEFINED : 

$5 4 3 2 1 DEMAND DEFINED 10 20 35 55 80 A schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices.

LAW OF DEMAND : 

LAW OF DEMAND As Price Falls… …Quantity Demanded Rises As Price Rises… …Quantity Demanded Falls An inverse relationship exists between price and quantity demanded

LAW OF DEMAND : 

Diminishing Marginal Utility LAW OF DEMAND

LAW OF DEMAND : 

Diminishing Marginal Utility LAW OF DEMAND Income Effect

LAW OF DEMAND : 

Diminishing Marginal Utility LAW OF DEMAND Income Effect Substitution Effect

LAW OF DEMAND : 

Diminishing Marginal Utility Income Effect Substitution Effect LAW OF DEMAND Demand Curve Individual and Market Demand

GRAPHING DEMAND : 

GRAPHING DEMAND P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80

GRAPHING DEMAND : 

55 P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND

GRAPHING DEMAND : 

35 P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND

GRAPHING DEMAND : 

P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND

GRAPHING DEMAND : 

P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND

GRAPHING DEMAND : 

P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN Connect the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND

GRAPHING DEMAND : 

P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 What if Demand Increases? GRAPHING DEMAND

GRAPHING DEMAND : 

P Q o $5 4 3 2 1 $5 4 3 2 1 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 D’ Increase in Demand Increase in Quantity Demanded 10 20 35 55 80 30 40 60 80 + GRAPHING DEMAND

GRAPHING DEMAND : 

P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 What if Demand Decreases? GRAPHING DEMAND

GRAPHING DEMAND : 

P Q o $5 4 3 2 1 $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 -- 10 20 40 60 D’ Decrease in Demand Decrease in Quantity Demanded GRAPHING DEMAND

DETERMINANTS OF DEMAND : 

DETERMINANTS OF DEMAND Tastes Number of Buyers Income Normal (Superior) & Inferior Goods Prices of Related Goods Substitutes & Complements Unrelated Goods Expectations

SUPPLY DEFINED : 

SUPPLY DEFINED $1 2 3 4 5 CORN Supply is a schedule or a curve showing the amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices. 5 20 35 50 60

LAW OF SUPPLY : 

LAW OF SUPPLY As Price Rises… …Quantity Supplied Rises As Price Falls… …Quantity Supplied Falls A direct relationship exists between price and quantity supplied

GRAPHING SUPPLY : 

5 P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY

GRAPHING SUPPLY : 

P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY

GRAPHING SUPPLY : 

35 P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY

GRAPHING SUPPLY : 

P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY

GRAPHING SUPPLY : 

P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY

GRAPHING SUPPLY : 

S P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN Connect the Points GRAPHING SUPPLY

GRAPHING SUPPLY : 

S P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN What if Supply Increases? GRAPHING SUPPLY

GRAPHING SUPPLY : 

S P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 Price of Corn Quantity of Corn $5 4 3 2 1 60 50 35 20 5 CORN 80 70 60 45 30 S’ Increase in Supply Increase in Quantity Supplied GRAPHING SUPPLY

GRAPHING SUPPLY : 

S P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN What if Supply Decreases? GRAPHING SUPPLY

GRAPHING SUPPLY : 

S P Q o $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 Price of Corn Quantity of Corn CORN S’ 45 30 20 0 -- Decrease in Supply Decrease in Quantity Supplied GRAPHING SUPPLY

DETERMINANTS OF SUPPLY : 

DETERMINANTS OF SUPPLY Resource Prices Technology Taxes & Subsidies Prices of Other Goods Price Expectations Number of Sellers

DETERMINANTS OF SUPPLY : 

DETERMINANTS OF SUPPLY Resource Prices Technology Taxes & Subsidies Prices of Other Goods Price Expectations Number of Sellers Combining with Demand

MARKET DEMAND & SUPPLY : 

MARKET DEMAND & SUPPLY $5 4 3 2 1 10 20 35 55 80 $5 4 3 2 1 60 50 35 20 5 200 B U Y E R S MARKET DEMAND 2,000 4,000 7,000 11,000 16,000 200 S E L L E R S 12,000 10,000 7,000 4,000 1,000 MARKET SUPPLY EQUILIBRIUM Graphically… x x

MARKET DEMAND & SUPPLY : 

7 S P Q o $5 4 3 2 1 2 4 6 8 10 12 14 16 $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 D Price of Corn Quantity of Corn CORN MARKET CORN MARKET Market Clearing Equilibrium MARKET DEMAND & SUPPLY

MARKET DEMAND & SUPPLY : 

7 S P Q o $5 4 3 2 1 2 4 6 8 10 12 14 16 $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 D Price of Corn Quantity of Corn CORN MARKET CORN MARKET Surplus At a $4 price more is being supplied than demanded MARKET DEMAND & SUPPLY

MARKET DEMAND & SUPPLY : 

11 7 S P Q o $5 4 3 2 1 2 4 6 8 10 12 14 16 $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 D Price of Corn Quantity of Corn CORN MARKET CORN MARKET At a $2 price more is being demanded than supplied Shortage MARKET DEMAND & SUPPLY

MARKET DEMAND & SUPPLY : 

11 7 S P Q o $5 4 3 2 1 2 4 6 8 10 12 14 16 $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 D Price of Corn Quantity of Corn CORN MARKET CORN MARKET Shortage MARKET DEMAND & SUPPLY Surplus

MARKET EQUILIBRIUM : 

MARKET EQUILIBRIUM Equilibrium Price & Quantity Rationing Function of Prices Changes in Demand Changes in Quantity Demanded Changes in Supply Changes in Quantity Supplied

Complex Cases : 

Complex Cases Supply Increases; Demand Decreases Prices Decrease Quantity Indeterminate Supply Decreases; Demand Increases Price Increases Quantity Indeterminate Multiple Shifts…

Complex Cases : 

Complex Cases Supply Increases; Demand Increases Prices Indeterminate Quantity Increases Supply Decreases; Demand Decreases Price Indeterminate Quantity Decreases Multiple Shifts…

Government Set Prices : 

Government Set Prices Price Ceilings Shortages Rationing Problem Black Markets Rent Controls Price Floors Surpluses

Slide 43: 

Price Ceiling A maximum price that sellers may charge for a good, usually set by government. Excess Demand (Shortage) Created by a Price Ceiling

Price ceiling : 

Price ceiling Price Rationing :The process by which the market system allocates goods and services to consumers when quantity demanded exceeds quantity supplied. Ration coupons Tickets or coupons that entitle individuals to purchase a certain amount of a given product per month. Black market A market in which illegal trading takes place at market-determined prices.

Slide 45: 

PRICE FLOORS Price floor A minimum price below which exchange is not permitted. Minimum wage A price floor set under the price of labor. Agricultural Products