Submitted to :- Dilpreet Madam

Submitted by:- Jatinder kaur , Roll no.:- 180603, B.voc retail

management 2nd sem
THE LAW OF SUPPLY
The higher the price,
the larger the
quantity supplied.
SUPPLY SCHEDULE
What Causes Supply Curve To Shift
(Change in relationship of price and Quantity)

 Change (increase or decrease) in

cost of production -- inputs;
 Increase (or decrease) in the
number of producers.
 Change (increase or decrease) in tax
rates.
 State of production technology.
INCREASE IN SUPPLY
 DECREASE IN SUPPLY
SUPPLY
$1.00
Price
per $0.80
Pound
of $0.60 LEFTWARD
Apples SHIFT
$0.40
$$$
$0.20

13 23
10 20 30
Thousands of Pounds of Apples per day
 SUPPLY
(Smaller quantity
$1.00 Lesser for the same price)
Price Supply
per $0.80
Pound
$0.60 Greater
of Supply
Apples (Greater quantity
$0.40
$$$ for the same
price)
$0.20

10 20 30
Thousands of Pounds of Apples per day
MARKET EQUILIBRIUM
The quantity of a product demanded is exactly
equal to the quantity supplied.
There is no pressure to change price.
 DEMAND
$1.00
Price SUPPLY
per $0.80
Pound
of $0.60 Market
Equilibrium
Apples
$0.40
$$$
$0.20

10 20 30
Thousands of Pounds of Apples per day
SHORTAGE
 Occurs when the market price is below the
equilibrium price.
 Consumers are willing to buy more of the
product, at this lower price, than producers are
willing to sell.
 $1.00 DEMAND
SUPPLY
Price
per $0.80
Pound
of $0.60 Market
Equilibrium
Apples
$0.40 shortage
$$$
$0.20

10 20 26 30
Thousands of Pounds of Apples per day
SURPLUS
 Occurs if market price exceeds equilibrium price.
 Producers are willing to sell more, at this higher
price, than consumers are willing to buy.
MARKET EFFECTS OF CHANGES
IN DEMAND
 An increase in market demand (i.e.,a rightward
shift in the demand curve) results in a higher a
equilibrium price and higher equilibrium quantity.
 A decrese in market demand
( i.e.,a leftward shift in the demand curve) results
in lower equilibrium price and lower equilibrium
quantity
 DEMAND New Equilibrium
$1.00
Price SUPPLY
per $0.80
Pound $0.65
Rightward
of $0.60
Demand Shift
Apples
$0.40
$$$
original
$0.20 equilibrium 25 D2
D1
14 20 26 32 38
Thousands of Pounds of Apples per day
 Leftward Shift
$1.00 DEMAND New Market
Price Equilibrium
SUPPLY
per $0.80
Pound Original
of $0.60 Market
$0.52 Equilibrium
Apples
$0.40
$$$
$0.20
D2 D1

10 16 20 30
Thousands of Pounds of Apples per day
 Original
Market
$1.00 DEMAND Equilibrium rightward
Price SUPPLY supply
per $0.80 shift
Pound S1
of $0.60
S2
$0.45
Apples
$0.40 New
$$$
Market
$0.20 Equilibrium

10 202 30
4 Apples per day
Thousands of Pounds of
 New Market Equilibrium

DEMAND SUPPLY
$1.00 S2
Price
per $0.80 leftward
S1
Pound $0.70 supply
of $0.60 shift
Apples
$0.40 Original
$$$
Market
$0.20 Equilibrium

10 18 20 30
Thousands of Pounds of Apples per day