Transcript SUPPLY AND DEMAND - Рафальская Ирина

SUPPLY AND DEMAND
DEMAND
QUANTITY DEMANDED IS A QUANTITY
DESIRED, WHICH CONSUMERS WISH TO
PURCHASE; A FLOW OF GOODS
PURCHASED
5 DETERMINANTS OF QUANTITY
DEMANDED
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The price of the product
The prices of other product
The consumer’s income & wealth
The consumer’s tastes
Various individual specific or environmental factors
QDN = D (PN, P1,….,PN-1, Y, S)
Qdn – a quantity demanded
N – a product
Pn – a price of a product
P1, Pn-1 – a shorthand notation for the prices of all
other products
• Y – consumer’s income
• S – variety of determinates, such as age, number of
children, place of residence, weather matters,
consumer tastes, etc.
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THE LAW OF DEMAND
The lower the price of
a product, the larger
the quantity that will
be demanded,
ceteris paribus
DEMAND SCHEDULE FOR TOMATOES
Alexei
Maria
Letter,
point on
the curve
Price
Quantity
demanded
per month,
kg
Letter,
point on
the curve
Price
Quantity
demande
d per
month, kg
A
30 rub
5
F
30 rub
7
B
35 rub
4
G
35 rub
6
C
40 rub
3
H
40 rub
5
D
45 rub
2
I
45 rub
4
E
50 rub
1
J
50 rub
3
A MARKET DEMAND SCHEDULE FOR
TOMATOES (MARIA AND ALEXEI)
The alternative market
demand
The market demand
Letter,
point on
the curve
Price
Quantity
demanded
per month,
kg
Letter,
point on
the curve
Price
Quantity
demande
d per
month, kg
V
30 rub
12
V’
30 rub
16
W
35 rub
10
W’
35 rub
14
X
40 rub
8
X’
40 rub
12
Y
45 rub
6
Y’
45 rub
10
Z
50 rub
4
Z’
50 rub
8
THE DEMAND CURVE SHIFTS TO THE RIGHT
THE DEMAND CURVE SHIFTS TO THE LEFT