Demand & Supply

Prepared by:

GAURAV SAXENA

CONTENTS

What is Demand? What is Supply? Determinant of Price Demand curve shift Supply curve shift

What is Demand?

An economic principle that describes a

consumer’s desire and willingness to pay a

price for a specific good or service. Holding all other factors constant, the price of a good or

service increases as its demand increases and

vice versa. For the same quantity available if the demand increases then you will end up paying

more

What is Supply?

Supply is the amount of something, such as a

product or service, that a market has available.

Holding all other factors constant, the

price of a good or service decreases as its

supply increases and vice versa. If the supply

of a commodity increases then for the same quantity you will

be paying less

Demand and supply are complementary to each other, a pull

or push in one affects the other. The price of a product is determined by the

intersection of demand and supply

curves

Determinant of Price

The original demand curve DD and supply curve SS determines

the price P of quantity Q demanded. If the demand increases

from Q to Q1 then for the same supply curve price of the commodity

rises from P to P1

Demand curve

shift

If the supply of certain commodity rises from Q

to Q1 without any significant increase in the demand then the

price of commodity falls from P to P1

Supply curve shift

If the supply of certain commodity rises from Q

to Q1 without any significant increase in the demand then the

price of commodity falls from P to P1

Supply curve shift

If the supply of certain commodity rises from Q

to Q1 without any significant increase in the demand then the

price of commodity falls from P to P1

Supply curve shift

If the supply of certain commodity rises from Q

to Q1 without any significant increase in the demand then the

price of commodity falls from P to P1

Supply curve shift

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