1.2.1 Demand and supply

• Demand is the quantity of good that consumers are willing and able to purchase at various prices during a period of time.
• Relationship between price and quantity demanded is called demand curve
• TICS


  tastes, income, compliments, substitutues/seasonality
• Factors leading to change in demand

  changes in prices of substitutes and complementary goods

  changes in income

  fashion, tastes, preferences

  advertising and branding

  demographics

  external shocks

  population

  price
• Increase in demand moves curve right and up and decrease in demand moves curve left and down
• Factors leading to change in supply

  changes in cost of productions

  new technology

  indirect taxes

  government subsidides

  external shocks
• Increase in demand moves right, decrease in demand moves left
• Supply and demand. Rise in demand/supply shifts right on demand curve. Rise in demand/supply shifts left on demand curve.

  A) rise

  B) fall

  C) price

  D) price

  E) quantity

  F) quantity

  
• Decrease in supply

  • Demand initial line goes right
  • Q2 to q1 starting from left
  • p2 to p1 going down
• Increase in supplycauses fall in price

  • demand initial line goes right
  • q1 to q2 starting from left
  • p1 to p2 going down
• Increase of demand

  • supply initial line goes left
  • q1 to q2 starting from left
  • p2 to p1 going down
• Decrease of demand - fall in price

  • supply initial line goes left
  • q2 to q1 starting from left
  • p1 to p2 going down