Basic Elements of Demand and Supply
The graph shows a curve representing the inverserelationship between prices of goods and services and thequantity of goods and services demnded, which in this caserefers to bicycles.this curve is reffered to as the demandcurve. It will be noted that the slope of the demand curve inthe brpah is in a downward direction indicating that as price of bicycles decreases, demand for bicycles in increases., andvice versa.
EFFECTS OF CHANGES IN NONPRICE DETERMINANTS OFDEMAND
The law of demand applies only when all the factorsinfluencing demand remain constant. A change in any of thenonprice factors influencing demand remain constant. A change in anyof the nonprice factor of demand may affect the original set of demandfor a ceratin product or service. The demand for bicycle (as indicated in Table 1) is such because the price of the presumed substitute, themotorbike, remains constant. If the motorbike is really a substitute,then a change in its price will affect the demand for bicycles. Table 2shows the adjusted demand schedule for bicycles when there is achange in the price of motorbikes.
SHIFTS IN THE DEMAND CURVE
When in the demand schedule is plotted in a graph, the originaldemand curve (c
) will shift to the left(c
) when there is a decrease indemand, and shift to the right (c
) when there is an increase indemand.Shifts in demand curve happen not only when there are changes inincome but also when there are changes in the other factors.
ADJUSTED DEMAND SCHEDULE FORBICYCLEPriceperUnit(Php)OriginalDemandDemand forBicyclesIf price of motorbikeisIncreased(units)Decreased(units)5,00010,00011, 0009, 0006,0009, 00010, 0008, 0007,0008, 0009, 0007, 0008,0007, 0008, 0006, 0009,0006, 0007, 0005, 00010, 5, 0006, 0004, 000
Medina, Roberto G.
Principles of Economics.
Manila: Rex Bookstore, 1986
NonPriceDeterminants of Demand
1.Average incomeof consumers2.Size of the Marketa.Substitutesb.Complements3.Price andavailability of related goods4.Preferences or