LAW OF SUPPLY AND DEMANDS

The Law of Demand

• The Law of Demand states that as Demand

goes up PRICE goes down.

• There is an INVERSELY proportional

relationship between PRICE and DEMAND.
Change in price will result in a movement along
the demand curve.
Hypothetical goods that are exempted from the
law of Demand

These goods exempted from the Law of

Demand because they have an UPWARD SLOPING
DEMAND CURVE rather than the usual downward
slope.
GIFFEN GOODS – inferior goods that are substitutes
for more expensive goods, that people buy more
when they cannot afford a superior good.

VEBLEN GOODS – goods that people buy because it is

expensive, as a show of wealth.
The Law of Supply

The Law of Supply states that as Supply goes

up Price goes up as well.

There is a directly proportional relationship

between Price and Supply.
 A change in any variable other than price that
influences quantity supplied produces a shift
in the supply curve or a change in supply.

 Factors that shift the supply curve include;

1. change in input costs
2. increase in technology
3. change in size of the industry
Changes in the Supply Curve
 Change in the cost of production
- supply will shift outward if costs decrease and;
- supply will shift inward if they increase.
Change in the expected Demand
- supply will shift outward if enthusiasm is
expected to increase and;
- supply will shift inward if there is an
expectation for consumers preferences to change
in favor of an alternate good or service.
Demand and Supply Determinants
Demand Supply
Law of Demand, Law of Supply
Assignment:
1. Research about case/s on law of supply
and demand apply to health care policy
making.
2. Make a reaction paper about Health
status of the Philippines and Asia.(at
present)

Note: to be passed on Tuesday – March 10,

2020