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  • Price: Law of Demand: As Price Increases, Quantity Demanded Decrease (Negative Relationship)

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    Zulaikha Zaidi
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    The document discusses concepts related to demand and supply, including: 1) The law of demand which states that as price increases, quantity demanded decreases, showing an inverse relationship. 2) How changes in other factors like the price of substitutes or complements can shift demand curves. 3) How supply can decrease due to events like COVID-19, shifting the supply curve left and increasing prices. 4) Government interventions like price ceilings and floors that set maximum and minimum prices. 5) The concept of elasticity - whether demand is elastic or inelastic based on how sensitive consumers are to price changes.

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    2Q DSME

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    The document discusses concepts related to demand and supply, including: 1) The law of demand which states that as price increases, quantity demanded decreases, showing an inverse relationship. 2) How changes in other factors like the price of substitutes or complements can shift demand curves. 3) How supply can decrease due to events like COVID-19, shifting the supply curve left and increasing prices. 4) Government interventions like price ceilings and floors that set maximum and minimum prices. 5) The concept of elasticity - whether demand is elastic or inelastic based on how sensitive consumers are to price changes.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views5 pages

    Price: Law of Demand: As Price Increases, Quantity Demanded Decrease (Negative Relationship)

    Uploaded by

    Zulaikha Zaidi
    The document discusses concepts related to demand and supply, including: 1) The law of demand which states that as price increases, quantity demanded decreases, showing an inverse relationship. 2) How changes in other factors like the price of substitutes or complements can shift demand curves. 3) How supply can decrease due to events like COVID-19, shifting the supply curve left and increasing prices. 4) Government interventions like price ceilings and floors that set maximum and minimum prices. 5) The concept of elasticity - whether demand is elastic or inelastic based on how sensitive consumers are to price changes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 5

    Price

    D
    Quantity

    Price

    D
    nasilemakKFC
    Quantity

    Above diagram shows changes in quantity demanded due to a change in price itself.

    Law of demand: as price increases, quantity demanded decrease (negative relationship)


    Price

    D
    D
    nasilemakMCD0 Quantity
    nasilemakMCD1

    Above diagram shows changes in demand due to change in other price itself factors.

    Price of other goods

    P nasi lemak KFC decreases, Qd nasi lemak KFC increases. D nasi lemak MCD decrease.

    Positive relationship: substitute good

    Pmee decrease, Qd mee increase, D meehon decrease.

    Negative relationship: complement goods

    Strawberry and vanilla ice cream.

    Pstrawberry increases, Qdstrawberry decreases, Dvanillaicecream decrease.

    PMOVIETICKET decrease, Qdmovieticket increase. Dpopcorn increase.


    S

    D0

    Due to COVID, PKP, Demand for RON95 decrease, demand curve shifting to the left from D0 to D1.
    Equilibrium price decrease from P0 to P1. Equilibrium quantities decrease from Q0 to Q1.

    D0

    COVID 19, Supply bricks decrease, supply curve shift to the left. Equilibrium price increase, equilibrium
    quantity decrease

    Government intervention.

    Ceiling price: maximum price.

    Advantage: consumer pay less.

    Disadvantage: producer profit fall.

    Floor price: minimum price. Small scale producer. Farmer, fishermen.

    \
    ELASTICITY

    Price

    D
    Quantity

    Demand curve steeper . Inelastic. NO @ less substitute. Addiction. Loyalty. Consumers are less sensitive. T20.
    Changes in price > changes in quantity. Elasticity coefficient < 1

    Price

    Quantity

    Demand curve flatter . Elastic. high substitute. Consumers are very sensitive. B40.

    Changes in price < changes in quantity. 1<Elasticity coefficient < infinity


    Price

    Quantity

    Perfectly inelastic. Consumers not sensitive. Medicine @ uphamol. Ep=0

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