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depends on price and other factors such as consumer’s incomes and the price
of related goods.
Supply refers to as the quantity of a good or service that firm supply depends
on price and other factors such as the cost of inputs firms use to produce the
good or service.
price and many other factors, including their own taste, information, price
of other goods, income and government actions.
while holding the other purchasing influences constant.
The amount of a good that consumers are willing to buy at a given price,
holding constant the other factors that influences purchases, is the quantity
demanded. The quantity demanded of a good or service can exceed the
quantity actually sold.
For-example; As a promotion, a local market might sell DVDs for $1 each
today only. At low price, you might want to buy 25 DVDs, but because the
store run outof a stock, you can buy only 10 DVDs. Even though you only
purchase 10 of the 25, the quantity you demand is the quantity you want.
The law of demand describes the relationship between the price of a good
goes up, fewer people are willing to buy it.or service and the quantity
demanded by consumers, assuming all other factors remain constant.
When the price of a good or service decreases, the quantity demanded for
that good or service increases, and when the price of a good or service
increases, the quantity demanded decreases.
In other words, there is an inverse or negative relationship between price
and quantity demanded. This means that as the price of a product or service
goes down, more people are willing and able to purchase it, and as the price
the price of other goods, and other factors that influence the amount they
consume.
According to the Law of Demand, demand curves slope downward. A
downward-sloping demand curve illustrates that consumers demand a larger
quantity of this good when its price is lowered and a smaller quantity when its
For-example; if the price of apples falls from $2 to $1.5, the consumers want
to buy increase.
These changes in the quantity demanded in response to change in price are
movements along the demand curve.
The effect of a change in a demand in a factor that affects demand other
than product price. A change in any factor other than the price of a good
itself cause a shift of the demand curve rather than a movement along the
demand curve.
This graphical representation shows the demand curve for apples
shift to the
right from D1 to D2 as the price of tomatoes, a substitute, increase by 55c
per ib. At price $2 per Ib, the quantity of apples demanded goes from 80
million Ibs on D1, before the increase in the price of tomatoes, 93 million
Ibs on D2, after the increase.
Similarly, consumers tend to buy more apples as their incomes rise. Thus, if
the income rises, the demand curve for apples shift to right , indicating
consumers demanding more apples at any given price.
Firm determine how much of a good to supply based on the price of that good
and other factors, including the costs of production and government rules and
regulations.
Production costs influence how much firms want to charge for a product. A
company is willing to supply more as its cost drops, all else the same. If the
firm’s cost exceeds what it can earn from selling the good, firm
sells nothing.
Government rules and regulations have an effect on how much firms want to
sell or have the right to sell. Taxes and many government regulations such as
those covering pollution, sanitation, and health insurance alter the costs of
constant the other factors that influence firm’s supply decisions.
The amount of a good that firms want to sell at a given price, holding constant
other factors that influence firms’ supply decisions such as costs and govern-
of apples.
If the price of apples increases to $2 per pound, producers will supply 200
pounds of apples.
If the price further increases to $3 per pound, producers will supply 300
pounds of apples.
The supply curve shows how the quantity supplied changes as the price
changes. If other factors affecting supply (such as production costs or
technology) remain constant, this supply curve shows the behavior of apple
producers in this market.
the quantity supplied by producers decreases.
or service and the quantity supplied by producers all other factors remain
constant.
When the price of a good or service increases, the quantity supplied by
producers also increases, and when the price of a good or service decreases,
for apples. The supply curve is upward slopping. An increase in the price
of apples causes a movement along the supply curve, so more apples are
supplied.
There is no law of supply that requires the market supply curve have a
particular slope, in spite of the fact that the Law of Demand requires the
demand curve to slope downward. The market supply curve can be
vertical, horizontal, upward sloping, or downward sloping. Many supply
curves slope upward, such as the one for apples. Along such supply curves,
more firms are willing to sell at higher prices while keeping costs and
governmental restrictions constant.
the entire supply curve to shift.
fertilizer which is used to produce apples, cause the supply curve for
apples to shift left from S1 to S2. At the price of apples at $2 per Ib,
the quantity supplied falls from 80 on S1 to 69 on S2. When the price
of apples changes, the changes in the quantity supplied reflects a
movement along the supply curve. When costs, government rules,
other variables that affects supply change, the entire supply curve.
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