Review of Demand & Supply

《Review of Demand & Supply》由会员上传分享，免费在线阅读，更多相关内容在学术论文-天天文库。

1、●●●●●●●●●●●●●●●●●●●●●●●●●●2Revision–DemandandsupplyDemand:Thewillingnessandabilityofaconsumertopurchaseaquantityofagoodorserviceatacertainprice(inagiventimeperiod).Supply:Thewillingnessandabilityofaproducertoproduceaquantityofagoodorserviceatacertainprice(inagiventimeperiod).Lawofdemand:Asthepriceo

2、fagoodfalls,thequantitydemandedwillnormallyincrease.(Thedemandcurveusuallyslopesdownwards,ceterisparibus).Lawofsupply:Asthepriceofagoodrises,thequantitysuppliedwillnormallyrise.(Thesupplycurveusuallyslopesupwards,ceterisparibus).Ceterisparibus:Anassumptionthatmeans‘allotherthingsbeingequal’.Demanda

3、ndthepriceofthegoodorserviceNormaldemandcurveAchangeinthepriceoftheproductitselfwillleadtoachangeinthequantitydemandedoftheproduct,i.e.amovementMovementalongalongtheexistingdemandcurve.Thephrase‘changeinthePrice($)theDcurveP1quantitydemanded’isimportant,sinceitdifferentiatesachangeinpricefromtheeff

4、ectofachangeinanyoftheotherP2determinantsofdemand.(Seethediagramontheleftbelow.)D0Q1Q2ThedeterminantsofdemandQuantityThereareanumberoffactorsthatdeterminedemandandleadtoanactualshiftofthedemandcurvetoeithertherightortheleft.Wheneverwelookatachangeinoneofthedeterminants,wealwaysmaketheceterisparibus

5、assumption.Income:Changesshiftthedemandcurve.Outcomedependsonwhetherthegoodsarenormalorinferior.Priceofothergoods:Changesshiftthedemandcurve.Outcomedependsonwhethertheproductsaresubstitutesorcomplements.Tastes:Changesshiftthedemandcurve.Outcomedependsonwhetherthechangeisinfavouroforagainsttheproduc

6、t.Causedby:Causedby:•afallinpriceofasubstitute•anincreaseinpriceofasubstitute•anincreaseinthepriceofacomplement•afallinthepriceofacomplementPrice($)•afallinincomeforanormalgood•anincreaseinincomeforanormalgood•anincreaseinincomeforaninferiorgood•afallinincomeforaninferiorgood•achangeintastesagainst

7、oftheproduct•achangeintastesinfavouroftheproductD1D2D30QuantityOtherfactors:Therearelargerfactorswherechangesthatmayalsoshiftthedemandcurve,suchaschangesinthesizeofthepopulation,changesinincomedistribution,