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    Demand&supply

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    phuongattacking456
    This document summarizes the key concepts of demand and supply. It shows demand and supply curves on a graph and explains: 1) How a change in price affects both demand and supply - higher price means lower demand but higher supply. 2) The different factors that can cause a shift in the demand or supply curves, such as income changes, prices of related goods, and expectations about future prices.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Demand&supply

    Uploaded by

    phuongattacking456
    4 views1 page
    This document summarizes the key concepts of demand and supply. It shows demand and supply curves on a graph and explains: 1) How a change in price affects both demand and supply - higher price means lower demand but higher supply. 2) The different factors that can cause a shift in the demand or supply curves, such as income changes, prices of related goods, and expectations about future prices.

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    demand&supply

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    This document summarizes the key concepts of demand and supply. It shows demand and supply curves on a graph and explains: 1) How a change in price affects both demand and supply - higher price means lower demand but higher supply. 2) The different factors that can cause a shift in the demand or supply curves, such as income changes, prices of related goods, and expectations about future prices.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    4 views1 page

    Demand&supply

    Uploaded by

    phuongattacking456
    This document summarizes the key concepts of demand and supply. It shows demand and supply curves on a graph and explains: 1) How a change in price affects both demand and supply - higher price means lower demand but higher supply. 2) The different factors that can cause a shift in the demand or supply curves, such as income changes, prices of related goods, and expectations about future prices.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    DEMAND & SUPPLY

    DEMAND SUPPLY

    7 7
    6 6
    Price (p)

    Price (p)
    5 5
    4 4
    3 3
    Curves 2
    1
    2
    1
    0 0
    0 1 2 3 4 0 1 2 3 4

    Quantity (q) Quantity (q)

    Own Price : Own Price:


    Movement Increase in own price decreases demand for Increase in own price increases supply of that
    Along that product, upward movement along D curve. product, upward movement along S curve.
    Curve Negative relationship between price and Positive relationship between price and quantity
    quantity demanded. supplied.
    # of buyers: # of sellers:
    Increase in number of buyers increases If number of sellers increases, the quantity
    quantity demanded, shifts D curve to the supplied increases, S curve shifts right.
    right.
    Income: Input Prices:
    - Normal Goods: Increase in income causes A fall in input prices, decreasing the cost of
    increase in quantity demanded at each price, production, increases the quantity supplied,
    Curve
    shifts D curve to the right. (Ex: Clothing) shifts S curve to the right.
    Shifters
    - Inferior Goods: An increase in income
    shifts D curves to the left. (Ex: Bus rides)
    Increase
    Prices of related goods: Technology:
    (decrease)
    - Substitutes: Two goods are substitutes if A cost saving technological improvement,
    in demand
    an increase in the price of one causes an decreasing the cost of production, increases
    or supply,
    increase in demand for the other, D curve quantity supplied, S curve shifts right. (Similar
    shifts
    shifts right. (Ex: Pizza & Hamburger) to the decrease in input prices)
    demand or
    - Complements: Two goods are complements
    supply
    if an increase in the price of one causes a fall
    curve to
    in demand for the other, D curve shifts left.
    the right
    (Ex: Software & Computer)
    (left).
    Expectations: Expectations:
    - If consumers expect prices to increase in If suppliers expect prices to go up in the
    the future they increase their demand today. future, they decrease their supply today and
    D curve shifts right. save inventory to sell for a higher price in the
    - If consumers expect their income to rise in future. S curve shifts left.
    the future, they increase their spending today,
    demand increases, D shifts right.

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