DEMAND AND SUPPLY ANALYSIS

• DEMAND - A relation between the price of a good and the quantity that consumers are willing and able to buy during a given period
• QUANTITY DEMANDED - the quantity of a commodity that people are willing to buy at a particular price at a particular point of time
• LAW OF DEMAND - It states that a quantity of a good demanded during a given period relates inversely to its price, other things constant
• DEMAND SCHEDULE - It is a curve showing the relation between the price of a good and quantity demanded during a given period
• DEMAND CURVE - A curve showing the relation between the price of a good and the quantity demanded
• INDIVIDUAL DEMAND - The demand of an individual consumer
• MARKET DEMAND - Sum of individual demands of all consumers in the market
• What are two basic types of market demand?

  PRIMARY AND SELECTIVE
• Factors are called assumptions or DETERMINANTS
• SUPPLY - A relation between the price of a good and the quantity that the producers are willing and able to offer for sale during a given period
• QUANTITY SUPPLIED - It is the amount sellers are willing and able to offer for sale at each possible price during a particular period of time
• LAW OF SUPPLY - The quantity of a good supplied during a given period is usually directly related to the price of the good
• MARKET EQUILIBRIUM - Market state where the supply in the market is equal to the demand in the market
• If market price is above equilibrium, Qs > Qd then the economy is at SURPLUS where market price will fall
• If the market price is below the equilibrium price Qd > Qs, then SHORTAGE EXISTS where market price rises to equilibrium
• DEMAND INCREASES when equilibrium price increases and equilibrium quantity increases
• DECREASE IN DEMAND occurs when decrease in price and decrease in equilibrium happens
• INCREASE IN SUPPLY - Occurs when decrease in equilibrium price and increase in quantity happens
• DECREASE IN SUPPLY - It occurs when price increases and quantity decreases
• PRODUCTION POSSIBILITIES CURVE - It is a graphical presentation of choices
• Production Possibilities Curve (PPC) shows all possible combinations of two goods that can be produced with available resources.