DEMAND AND SUPPLY

Demand and  Supply are fundamental concepts in economics that describe how markets function.

Demand:

Definition

 Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices over a given period.


Key Points

 Willingness and Ability

: For demand to exist, consumers must both want the product and have the financial means to buy it

Supply:

Definition:

 Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at various prices over a given period.

Demand Curve

Definition

 A graphical representation showing the quantity of a good or service that consumers are willing and able to buy at various prices over a specific period

Shape Typically downward sloping from left to right, indicating that as the price decreases, the quantity demanded increases, and vice versa.

                                                                       Supply Curve


Definition: 

A graphical representation showing the quantity of a good or service that producers are willing and able to sell at various prices over a specific period.

Shape: Typically upward sloping from left to right, indicating that as the price increases, the quantity supplied increases, and vice versa.

 Movement Along the Demand and Supply Curves:

Movement Along the Demand Curve



Causes:

Changes in the price of the good or service.

Effect: A change in price leads to a movement along the demand curve, either increasing the quantity demanded if prices fall (downward movement) or decreasing the quantity demanded if prices rise (upward movement).

  Example: If the price of coffee drops from $4 to $3 per cup, the quantity demanded might increase from 100 cups to 150 cups.


                                     Movement Along the Supply Curve



Cause: Changes in the price of the good or service.

Effect: A change in price leads to a movement along the supply curve, either increasing the quantity supplied if prices rise (upward movement) or decreasing the quantity supplied if prices fall (downward movement).

  Example: If the price of wheat rises from $5 to $7 per bushel, the quantity supplied might increase from 200 bushels to 250 bushels.


 Law of Demand and Supply:

Law of Demand:

Definition: 

States that, all else being equal, as the price of a good or service decreases, the quantity demanded increases, and as the price increases, the quantity demanded decreases.

Reason: 

This inverse relationship is typically due to the substitution effect (consumers replace more expensive items with cheaper alternatives) and the income effect (lower prices increase consumers' real purchasing power).


Law of Supply

Definition: 

States that, all else being equal, as the price of a good or service increases, the quantity supplied increases, and as the price decreases, the quantity supplied decreases.

Reason: 

Producers are willing to supply more of a good at higher prices because higher prices generally lead to higher potential profits, incentivizing production.

Summary: 

The demand and supply curves illustrate how the quantities of goods demanded and supplied vary with changes in price. Movements along these curves are caused by changes in the price of the good itself. The laws of demand and supply explain how price changes affect the quantity demanded and supplied.

https://youtu.be/kIFBaaPJUO0?si=kCEz52UIl06paOd8




Comments

  1. AnonymousAugust 18, 2024 at 2:51 AM

    Well summarized,clear and well understood

    ReplyDelete
  2. AnonymousAugust 18, 2024 at 11:40 PM

    Well researched, it's really a life teaching story 🙏

    ReplyDelete
  3. KatjimuneprivatetutorAugust 18, 2024 at 11:47 PM

    Very educative, mainly because it's explaining issues that we live with ( demand and supply).

    ReplyDelete
  4. AnonymousAugust 19, 2024 at 1:35 AM

    Very clear and simple to understand. I learned a lot

    ReplyDelete
  5. AnonymousAugust 19, 2024 at 1:55 AM

    Very comprehensive

    ReplyDelete

Post a Comment

Popular posts from this blog

CONFLICT

Image
Conflicts can arise in various contexts, including personal relationships, workplaces, and international relations. They can manifest as disputes, tensions, or confrontations and may involve competition for resources, power struggles, or divergent objectives.  2 . Conflict of Interest in Relation to Social Cost, Benefit, Private Costs, and Benefit A conflict of interest arises when an individual's or entity's personal interests interfere with their ability to make objective decisions that serve the public or organizational good. This conflict can affect how social costs and benefits, as well as private costs and benefits, are evaluated and managed. Social Cost and Benefit Social Costs:  These are the total costs to society resulting from a particular action or decision, including both private and external costs. A conflict of interest might lead someone to underreport or overlook certain social costs. For example, a company might downplay the environmental damage of its operat...
Read more

The price elasticity of demand

Image
 Definition The price elasticity of demand np) is sometimes referred to as the own price elasticity of demand. This is to distinguish the responsiveness of the quantity demanded of a good to its own price rather than to the price of another good. Price elasticity of demand (PED) is an economic concept that measures how the quantity demanded of a good or service changes in response to a change in its price. It is a crucial concept in understanding consumer behaviour and how sensitive demand is to price changes. Key Points: Definition: Price elasticity of demand is defined as the percentage change in the quantity demanded divided by the percentage change in price. The formula is: PED = %  Change in Quantity Demanded %  Change in Price PED=  % Change in Price % Change in Quantity Demanded Elastic vs. Inelastic Demand: Elastic Demand (PED > 1): When the percentage change in quantity demanded is greater than the percentage change in price. This means that consumers are...
Read more

TRADE UNION

Image
  Trade Union: Definition :  A trade union is an organized association of workers formed to protect and advance their rights, interests, and working conditions. Trade unions represent employees in negotiations with employers and aim to improve labour conditions through collective bargaining and other actions. Aims of Trade Unions: 1. Improving Working Conditions : Trade unions seek to ensure safer, healthier, and more favourable working conditions for their members.   Example : Negotiating better safety protocols and ergonomics in the workplace. 2. Securing Fair Wages : They aim to negotiate better wages and benefits for workers, ensuring fair compensation for their labour.   Example : Campaigning for salary increases or more comprehensive health insurance. 3. Advocating for Job Security: Trade unions work to protect members from arbitrary layoffs and unfair dismissal.   Example: Setting up procedures for redundancy and job security provisions in employment co...
Read more