Summary
Summary Supply and demand explained
- Course
- Institution
A summary on supply and demand, covering: demand, supply, equilibrium, price ceiling, price floor, and supply quota. There are graphs to aid your understanding.
[Show more]
Seller
Follow
mandimngezana
Content preview
Demand: Quantities of a good or service that consumers are willing and able to buy at various prices.Quantity demanded: The amount of goods and services that consumers are willing and able to buy at various prices.
The quantity demanded is a function of:
O The price of the good
O The price of other goods (complementary goods & substitutes)
O Consumer income
O Consumer tastes
Demand Schedule: The table that shows the relationship between price of a good and quantity demanded, holding other
things constant.
Law of demand: The quantity demanded of a good falls when price rises, ceteris paribus.
The demand curve: The curve that shows the relationship between price and quantity demanded
Demand curve Increase in demand Decrease in demand
Price
Price Price
D2
D D1
D1
D2
Factors that may lead to a shift in demand:
O Income normal goods (an increase in income leads to an increase in quantity demanded)
Inferior goods (an increase in income leads to a decrease in quantity demanded)
O Price of related goods (complementary goods and substitutes)
O Consumer tastes and habits (do you like or dislike the good, addictive goods)
O Expectations (income and prices)
O Number of buyers (size of the population)
Only a change in price will lead to a movement along the demand curve.
Supply: Quantity of goods and services that the same amount of sellers are willing and able to sell at various prices.
Quantity supplied: The quantity of goods and services that the same amount of sellers are willing and able to sell at each
specific price.
The supply curve: The curve that show the relationship between price and quantity supplied.
The law of supply: The quantity supplied of a good rises when the price of that good rises, ceteris paribus.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller mandimngezana. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.30. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
60281 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now