MANAGERIAL ECONOMICS

CHAPTER 2: Supply and

Demand: You Have Want
Consumers Want
MEMBERS:
BESARIO, PHENELOPE COOLEEN A.
CAINONG, NICA T.
CARDINES, KRISTINE MIKKAELLA JANE G.
OBJECTIVES:
Define Demand and Supply

To understand the law of supply and demand

Gain an understanding of changing price and shifting
curve in graphing demand
Gain an understanding of changing price and shifting
curve in graphing supply
How to determine equilibrium price
DEMAND

simply means a consumer's

desire to buy goods and
services without any
hesitation and pay the price
for it.
SUPPLY
describes the total amount of a
specific good or service that is
available to consumers. Supply can
relate to the amount available at a
specific price or the amount
available across a range of prices if
displayed on a graph.
LAW OF DEMAND

• The law of demand states

that as prices rise, customers
buy less.
• There is an inverse
relationship between price
and quantity demanded.
DEMANDING LOWER
PRICES

The relationship between how much

customers must pay for an item and
how much customers buy is called
demand. More precisely, demand
shows the relationship between a
good’s price and the quantity of the
good customers purchase, holding
everything else constant.
DEMANDING LOWER
PRICES
Quantity Demanded and Demand
Quantity demanded
-is the amount of the good customers purchase at a
given price. Quantity demanded is a specific
number.
-It appears like a dot only and represents only one
particular quantity. 
 
Demand
-refers to the entire curve.
-it shows how much is purchased at every possible
price.
- It appears like a line on which
multiple quantities for
different prices exist. 
 
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DEMANDING LOWER
PRICES

Graphing Demand
 
Changing price
Price changes cause movements along the demand
curve, or a change in quantity demanded.
 
An inverse relationship exists between price and
quantity demanded — price and quantity
demanded move in opposite direction.

An inverse relationship means that higher prices

result in lower quantity demand and
lower prices result in higher
quantity demand.
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DEMANDING LOWER
PRICES

Graphing Demand
 
Shifting the demand curve
When one of the things being held
constant — income, tastes, and the prices
of other goods — changes, the entire
demand curve shifts.
 
Any rightward shift in the demand curve is
an increase in demand, and any leftward
shift in the curve is a decrease
in demand.
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The factors that shift the entire demand curve are:
✓ Consumer tastes or preferences: A direct relationship exists between
desirability (consumer tastes) and demand. Thus, an increase in desirability
increases demand.
✓ Income: Income’s impact on demand is a little more complicated.
Economists note two types of goods
(a). Normal goods - a direct relationship exists between income and
c
demand — an increase in income increases demand. This is
the expected, or normal, relationship.
(b). Inferior goods - an increase in income decreases demand;
therefore, an inverse relationship exists between income
and demand for an inferior good.
✓ Prices of other goods: Changes in the prices of other goods are also a
little complicated. If the goods are consumer substitutes for one another,
they are used interchangeably.
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