demand, supply and equilibrium
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TOPICDEMAND, SUPPLY
AND EQUILIBRIUM
Konok Kumar Mondal
THE MARKET FORCES OF SUPPLY AND DEMAND 2
Demand
THE MARKET FORCES OF SUPPLY AND DEMAND 3
THE DEMAND SCHEDULE Demand schedule: a table that shows the relationship between the price of a good and the quantity demanded
Example: Dabir’s demand for apples.
Price of
apples
Quantity of apples
demanded0.00 161.00 142.00 123.00 104.00 85.00 66.00 4
Notice that Dabir’s preferences obey the Law of Demand.
THE MARKET FORCES OF SUPPLY AND DEMAND 4
DABIR’S DEMAND SCHEDULE & CURVE
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
0 5 10 15
Price of apples
Quantity of apples
Price of
apples
Quantity of apples
demanded
0.00 161.00 142.00 123.00 104.00 85.00 66.00 4
SUPPLY
THE MARKET FORCES OF SUPPLY AND DEMAND 6
THE SUPPLY SCHEDULE Supply schedule: A table that shows the relationship between the price of a good and the quantity supplied.
Example: Kabir’ s supply of apples.
Notice that Kabir’ s supply schedule obeys the Law of Supply.
Price of
apples
Quantity of apples supplied
$0.00 01.00 32.00 63.00 94.00 125.00 156.00 18
THE MARKET FORCES OF SUPPLY AND DEMAND 7
KABIR’ S’ SUPPLY SCHEDULE & CURVE
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
0 5 10 15
Price of
apples
Quantity of apples supplied
$0.00 01.00 32.00 63.00 94.00 125.00 156.00 18
P
Q
EQUILIBRIUM
THE MARKET FORCES OF SUPPLY AND DEMAND 9
SUPPLY AND DEMAND TOGETHER
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
0 5 10 15 20 25 30 35
P
Q
D S Equilibrium: P has reached the level where quantity supplied equals quantity demanded
THANK YOU
THE MARKET FORCES OF SUPPLY AND DEMAND 10
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