CHAPTER 2:

ELEMENTS OF DEMAND
AND SUPPLY
BSBA FM-1A
 CHANGE IN
DEMAND
A change in demand describes a shift in consumer
desire to purchase a particular good or service,
irrespective of a
variation in its price. The change could be
triggered by
a shift in income levels, consumer tastes, or a
different price being charged for a related product.
 FACTORS AFFECTING
DEMAND

Taste and Income (inferior

1 Preferences 5 good)
Price of Expectation (of
2 Complements 6 future prices)
Price of
3 Substitutes 7 Population
Income (normal
4 good)
 FACTORS
AFFECTING
Taste and
DEMAND Price of
Preferences Complements
Goods are
When taste
complement
shifts towards for each other,
the food, the when they are
demand for normally
that product bought
increases together
Ex. Printer and
ink
 FACTORS
AFFECTING
Price of
DEMAND Income (normal
Substitutes good)
When our
Substitutes
income
are good that increases, our
are bought for demand for
the same material stuff
purposes. increases.
Ex. Coca-cola
and pepsi
 FACTORS
AFFECTING
DEMAND
Income (inferior Population
good)
When the
describes a
number of
good whose people on an
demand drops island
when people's increases, the
incomes rise demand for
Ex. street houses
food increases.
 FACTORS
AFFECTING
DEMAND
Expectation (of future
prices)
El Nino occurs in some provinces in
the Philippines, shortage of rice in the
near future is expected that’s why the
price of rice is going to increase. When
the future price of rice increases, the
demand of rice today increases
 Demand schedule

The demand schedule shows exactly how

many units of a good or service will be
purchased at various price points. It is
important to note that as the price decreases,
the quantity demanded increases. The
relationship
follows the law of demand.
DEMAND Schedule

Price Quantity Demand

5 10

4 20

3 30

2 40

1 50

0 60
 Demand Curve

The demand curve is a graphical

representation of the relationship between the
price of a good or service and the quantity
demanded for a given period of time. In a
typical representation, the price will appear
on the left vertical axis, the quantity
demanded on the horizontal axis.
 DEMAND Curve

Price 4

0
0 10 20 30 40 50 60 70
Quantity Demanded
Thank You
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