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Basic Elements of Supply & Demand

What is demand?
The amount of economic good or service that a consumer or group of
consumer will want to purchase at a given price.
Law of Downward-sloping
When the price of a commodity is raised, buyers tend to buy less of the
commodity. Similarly, when the price is lowered, quantity demand increases
Law of Demand
The quantity of a good demanded is inversely related to the good's price.
( Other things are held constant).
When price goes up , quantity demanded goes down
When price goes down , quantity demanded goes up.
Demand Schedule
Demand Schedule or "Demand Curve" represent the relationship between
the market price of a good and quantity demanded of that good. When the
price of a commodity is raised, buyers tend to buy less of the commodity
Similar when the price is lowered quantity demand increase

Shift Factors of Demand
Average household income:
If consumers receive more income on average, they can be expected to purchase
more of most products even though product price remain the same.
We therefore expect that a rise in average consumer shifts the demand curve for
most products to the right.

The lower the price. other things being equal. .An increase in average consumer income increases the quantity demanded at each price.000 per year. When average income rises from $30. other things being equal Law of Supply The price of the product and quantity supplied are related positivity. the more its producers will supply. the less its producers will supply. The higher the product's own price.800 tons per month.500 tons per month to 100. quantity demanded at a price of $60 per ton rises from 77. A similar rise occurs at every other price What is Supply? Supply refers to the entire relationship between the quantity supplied of a product and the price of that product.

At higher prices. new suppliers enter the market. Supply Curve It represents the relationship between quantity supplied and price . Supply Schedule It shows the relationship between quantity supplied of a product and the price of the product. other things being equal. The law of supply is based on two phenomena: 1. existing suppliers supply more.. 2. At higher prices.

.Shift in the Supply curve Equilibrium Market equilibrium comes at the price at which quantity demanded equals quantity supplied. At that equilibrium there is no tendency for the price to raise or fall.