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    Basics of Demand Supply and Equilibrium

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    Basics of Demand Supply and Equilibrium

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    Download as pptx, pdf, or txt
    2 views8 pages

    Basics of Demand Supply and Equilibrium

    Uploaded by

    balidhruv8

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    Basics of

    Demand, Supply
    & Equilibrium
    Demand, supply, and equilibrium are fundamental economic
    principles that describe how markets function.
    Understanding these concepts is crucial for businesses,
    policymakers, and individuals to make informed decisions.

    by Jasjeev Kohli
    Demand: Definition and
    Key Factors
    Definition Key Factors
    Demand refers to the Factors affecting
    amount of a good or demand include price,
    service that consumers income, prices of related
    are willing and able to goods, consumer
    purchase at different preferences, and
    prices during a given expectations.
    time period.
    Determinants of Demand
    Price Income Preferences

    The price of the good or service Higher incomes generally lead Changes in consumer tastes
    is the primary determinant of to increased demand, as and preferences can shift the
    demand. As price increases, consumers can afford to demand curve, either
    quantity demanded decreases, purchase more. The relationship increasing or decreasing
    and vice versa. between income and demand demand for a product.
    varies by type of good.
    Supply: Definition and
    Key Factors
    1 Definition 2 Key Factors
    Supply refers to the Factors affecting
    amount of a good or supply include price,
    service that producers production costs,
    are willing and able to technology, and
    sell at different prices government policies.
    during a given time
    period.
    Determinants of Supply
    Price Production Costs
    The price of the good or The costs of inputs such as
    service is the primary labor, raw materials, and
    determinant of supply. As energy affect the willingness
    price increases, quantity and ability of producers to
    supplied increases, and vice supply goods and services.
    versa.

    Technology Government Policies


    Advances in technology can Government regulations,
    increase productivity and subsidies, and taxes can
    lower production costs, influence the supply of goods
    leading to an increase in and services in a market.
    supply.
    Market Equilibrium: Concept
    and Process
    1 Surplus
    When quantity supplied exceeds quantity demanded,
    there is a surplus, and the price will fall.

    2 Shortage
    When quantity demanded exceeds quantity supplied,
    there is a shortage, and the price will rise.

    3 Equilibrium
    The market reaches equilibrium when quantity supplied
    equals quantity demanded, and the price remains stable.
    Equilibrium Price and Quantity

    Demand Curve Supply Curve Equilibrium


    The demand curve shows the The supply curve shows the The equilibrium price and quantity
    relationship between price and relationship between price and are determined by the intersection
    quantity demanded. quantity supplied. of the demand and supply curves.
    Applying Demand and Supply
    Analysis

    Price Changes
    Analyzing how changes in price affect quantity demanded and supplied can help
    predict market outcomes.

    Government Intervention
    Understanding the impact of government policies, such as taxes and subsidies, on
    supply and demand is crucial for policymaking.

    Market Analysis
    Applying demand and supply principles can help businesses and consumers make
    informed decisions in the marketplace.

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