DEMAND,

SUPPLY &
EQUILIBRIUM
PRICES
MARIA KATHRINA CARLA
DORIA

DEMAND
In economics, it defined as
theutility for a good or
service of an economic agent,
relative to his/her income.

NONPRICE FACTORS
INFLUENCING DEMAND

Taste and
Preferences
Income
Normal Goods
Inferior Goods

Prices of goods
related in
consumptions:
*Substitute goods
*Complementary
goods
Future expectations
Number of
consumers

DEMAND & MARKET FUNCTION

Ademandfunction represents the quantity

demanded of a particular product by an consumer.
The market demand function is influenced by
the prices of related goods, as well as by the
tastes and preferences, income, & future
expectations of all consumers in the market.
DEMAND CURVE & SHIFTER
In economics, the demand curve is the graph
depicting the relationship between the price of a
certain commodity and the amount of it that
consumers are willing and able to purchase at that
given price.
There is certain economic elements that can force
a shift in the demand curve.

INVERSE RELATIONSHIP
A

relationship between two variables ( price of a good and the

quantity demanded) where an increase in the value of one
variable cases a decrease in the value of other variable.
CHANGE IN QUANTITY DEMANDED
Described the total amount of goods or services that are
demanded at any given point in time.
CHANGE OF DEMAND
Described that there has been a change, or shift in a market's
total demand.
INDIVIDUAL VS MARKET DEMAND CURVE
The individual demand curve represents the quantity of a
good that a consumer will buy at a given price while the Market
is the sum of all the individual demand curves in the market.

HORIZONTAL SUMMATION OF INDIVIDUAL

DEMAND CURVES
The process of deriving a market demand curve by
adding the quantity demanded by each individual at
every price to determine the market demand at
every price
LINEAR DEMAND FUNCTION
Described as graphical representation of the
relationship between the price of a good and the
quantity of that good consumers are willing to pay at
a certain price at a point in time.

SUPPLY
In economics, the amount of a
product which is available to
customers.

NONPRICE FACTORS
INFLUENCING SUPPLY

State of Technology
Input prices
Prices of Goods Related in Production
Future Expectation
Number of produces

SUPPLY FUNCTION
INDIVIDUAL SUPPLY FUNCTION
Individual supply function refers to the functional relationship
between supply and factors affecting the supply of a
commodity
MARKET SUPPLY FUNCTION
Market supply function refers to the functional relationship
between market supply and factors affecting the market
supply of a commodity.
SUPPLY CURVE & SHIFTERS
Depicts the supplier's relationship between price and quantity.
There is certain variables that can force a shift in the supply if
the values changed.

POSITIVE RELATIONSHIP

A relationship between two variables ( price of a

good and the quantity producers are willing to
supply) where an increase in the value of one
variable cases an increase in the value of other
variable.
LINEAR SUPPLY FUNCTION
The linear supply function is the mathematical
expression of the relationship between supply
and those factors that affect the willingness and
ability of a supplier to offer goods for sale.
CHANGE IN QUANTITY SUPPLIED
A change in quantity supplied is a change in the
specific quantity of a good that sellers are
willing and able to sell.

CHANGE IN SUPPLY

A change in supply is a change in the ENTIRE

supply relation.

EQUILIBRIU
M PRICES
Defined as the state in which market supply
and demand balance each other and, as a
result, prices become stable.

EQUILIBRIUM QUANTITY

is the quantity exchanged when amarketis in

balance (consumer demand equals the amount of
producers want to supply)
MARKET EQUILIBRIUM
It occurs at that price where the quantity demanded
by consumers equals the quantity supplied by
producers
EQUILIBRIUM PRICES
When price is lower than the equilibrium
price,quantity demandedwill be greater
thanquantity supplied. There will be a tendency for
the price to increase.
When price is higher than the equilibrium price,
quantity supplied will be greater than quantity
demanded. There will be a tendency for the price to
decrease.

CHANGE IN DEMAND
A change in demand will cause equilibrium price and output to
change in the same direction

CHANGE IN SUPPLY
A change in demand will cause equilibrium price and output to
change in opposite direction
CHANGES ON BOTH SIDES OF THE MARKET
A decrease in demand and an increase in supply will cause a
fall in equilibrium price, but the effect on equilibrium quantity
cannot be determined.
An increase in demand and a decrease in supply will cause an
increase in equilibrium price, but the effect on equilibrium
quantity cannot be determined.
If both demand and supply increase, there will be an increase
in the equilibrium output, but the effect on price cannot be
determined.
If both demand and supply decrease, there will be a decrease
in the equilibrium output, but the effect on price cannot be
determined.