Dynamics of Demand and Supply

Change in Quantity Demanded is the movement along a

demand curve which indicates movement from one point to
another point of the same demand curve. This is brought by
change in the price of goods and services

DEMAND GRAPH
120.00
100.00
X
80.00
60.00
Y
40.00
20.00
-
0 20 40 60 80 100 120
Change in Demand is the shift from one demand curve to
another and is brought by the changes in any of the non-price
determinants.

econ100.com/australia/mic/stips/images/dshift.gif
Change in Quantity Supplied is the movement along the supply
curve which shows the movement from one point to another
point on the same supply curve. This is brought by change in
the price of the goods or services.

SUPPLY CURVE
120.00

100.00
Y
80.00

60.00
X
40.00

20.00

-
0 20 40 60 80 100 120
Change in Supply is the shift of one supply curve to another
which is brought by changes in any of the non-price
determinants.
https://tamoclass.wordpress.com/2018/01/17/9111/
Demand Function is an the algebraic expression of the relationship
between price and quantity demanded
Holding other things constant, we can express the demand function as

Qd= a-bP
Where:
Qd = quantity demanded
a = intercept
b = slope of the function
P = price

For further readings, please refer to:

https://www.economicsdiscussion.net/law-of-demand/demand-meaning-laws-and-demand-function/19383
Example:

Given the equation Qd= 1200-200P. If the price is P2.00,

Quantity demanded would be:

Qd= 1200-200P
Qd= 1200-200(2)
Qd= 1200-400
Qd=800
Supply Function is an the algebraic expression of the relationship
between price and quantity supplied.

Holding other things constant, we can express the supply function

as;

Qs = m + nP
Where:
Qs = quantity supplied
m = the intercept
n = number of firm
P = price
Example:

Given the supply function- Qs= 0 + 200P, at the price of P2.00,

Quantity supplied would be-

Qs= 0 + 200(P)
Qs= 0+ 200(2)
Qs=400
Market Equilibrium is the point wherein quantity demanded is equal to
quantity supplied.
❖ Equilibrium price is the price at which quantity
demanded equals the quantity supplied

❖ Equilibrium quantity is the quantity bought and sold

at equilibrium price
https://tamoclass.wordpress.com/2014/01/22/ap-macro-market-equilibrium/
A market moves toward its equilibrium because

❑Price regulates buying and selling plans

❑Price adjusts when plans don’t match
Violations of the Law of Supply and Demand

❑ Government imposition of price ceiling

❑ Government imposes a price floor

https://tamoclass.wordpress.com/2014/01/22/ap-macro-market-equilibrium/
Price Floors are minimum prices set by the government for certain
commodities and services that it believes are being sold in an unfair market
with too low of a price and thus their producers deserve some assistance.

Price Ceilings are maximum prices set by the government for particular
goods and services that they believe are being sold at too high of a price
and thus consumers need some help purchasing them.

https://tamoclass.wordpress.com/2014/01/22/ap-macro-market-equilibrium/
Given the demand function and supply function, the
equilibrium price and quantity can be expressed as:

Qd = Qs
a - bP = m + nP
Example:

Given the following functions:

Qd= 1200-200P and Qs= 0+200P,
the equilibrium quantity would be-

1200-200P = 0+200P or -200P-200P= -1200+0

1200-0= 200P+200P -400P=-1200
1200=400P P=1200/400
P=3 P=3
To compute for equilibrium quantity:
1200-200(3) Qs=0+600
1200-600 Qs=600
Qd= 600