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  • Demand Market: Circular Flow of Economy Basic Element of Economy

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    Guanella Gaviño
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    The document discusses the circular flow of the economy and the basic elements of demand. It describes how money flows between households and firms through product and factor markets. There are two types of decision makers - firms that supply labor, land, and capital, and households that supply labor and demand goods and services. The law of demand states that demand for a good increases when the price decreases and decreases when the price increases, assuming all other factors remain equal. Determinants of demand include price, tastes, income, and prices of substitutes and complements.

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    Demand Market

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    The document discusses the circular flow of the economy and the basic elements of demand. It describes how money flows between households and firms through product and factor markets. There are two types of decision makers - firms that supply labor, land, and capital, and households that supply labor and demand goods and services. The law of demand states that demand for a good increases when the price decreases and decreases when the price increases, assuming all other factors remain equal. Determinants of demand include price, tastes, income, and prices of substitutes and complements.

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    Download as PPTX, PDF, TXT or read online from Scribd
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    3 views8 pages

    Demand Market: Circular Flow of Economy Basic Element of Economy

    Uploaded by

    Guanella Gaviño
    The document discusses the circular flow of the economy and the basic elements of demand. It describes how money flows between households and firms through product and factor markets. There are two types of decision makers - firms that supply labor, land, and capital, and households that supply labor and demand goods and services. The law of demand states that demand for a good increases when the price decreases and decreases when the price increases, assuming all other factors remain equal. Determinants of demand include price, tastes, income, and prices of substitutes and complements.

    Copyright:

    Public Domain
    Download as PPTX, PDF, TXT or read online from Scribd
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    DEMAND MARKET

    Circular Flow of Economy


    Basic Element of Economy
    CIRCULAR FLOW OF ECONOMY
    Circular Flow of Economy Model
     shows how money flows through markets among households and firm.

    Two kinds of decision makers


     Firms
    • Labor
    • Land
    • Capital
     Households
    CIRCULAR FLOW OF ECONOMY
    Two Types of Markets:

     Markets for goods and services

     Markets for the factors of production


    CIRCULAR FLOW OF ECONOMY
    BASIC ELEMENTS OF DEMAND

    Market
     group of buyers and sellers of a particular good or service.
    LAW OF DEMAND
    Demand
     amount of good that buyers are willing to buy.

    LAW OF DEMAND
     States that the lower the price of a certain good the higher its demand, then the higher its price the
    lower demand it has.
    LAW OF DEMAND

    Determinants of demand
     Price of a good
     Taste or level of desire for the product by the buyer
     Income of the buyer
     Prices of related goods
    • Substitute products
    • Complementary products
     Future expectations
    LAW OF DEMAND
    Ceteris Paribus
     Latin phrase means “all other things being equal”

    Demand Curve Demand Schedule

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