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DEMAND Definition The Law Of Demand Assumption Demand Curve Determinants Of Demand

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SUPPLY Definition Law Of Supply Assumptions Supply Curve Determinants Of

Supply

Conclusion

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Definition:

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The law of demand holds that other things equal, as the price of a good or service rises, its quantity demanded falls.

– The reverse is also true: as the price of a good or service falls, its quantity demanded increases.

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Income Remain Constant

Price of related good should not change

No changes in future expectation

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Number of Bottles per Month

Price per Bottle

A

When the price is $4.00 per bottle, 40,000 bottles are demanded (point A).

B

At $2.00 per bottle, 60,000 bottles are demanded (point B).

40,000 60,000

$4.00

2.00

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Change In Taste And Fashion.

Changes In Income.

Changes In Weather.

Changes In Population.

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Supply is the quantity of output brought for sale in the market at a certain price

Definition:

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If nothing else changes, firms are willing to supply a greater quantity of good or service at higher prices than lower.

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Constant cost of production

Constant price of capital goods

Constant technology

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Number of Bottles per Month

Price per Bottle When the price is $2.00

per bottle, 40,000 bottles are supplied (point F).

At $4.00 per bottle, quantity supplied is 60,000 bottles (point G).

40,000 60,000

$4.00

2.00

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Change In Production Cost.

Change In Agriculture Output.

Development And Order Situation In The Country.

Law And Order Situation In The Country.

To optimize equilibrium point it a corroboration is necessary between demand and supply.

Demanding the supply or supplying the demand is the key of growth in the market economy.

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