MICROECONOMICS CHAPTER 2

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MICROECONOMICS CHAPTER 2 by Mind Map: MICROECONOMICS CHAPTER 2

1. DEFINE DEMAND

1.1. its a relationship between a product's price and quantity demanded

1.2. the law of demand states that price and quantity demanded are inversely related

1.3. market demand is the sum of quantities demanded by all consumers in a market

2. DEFINE SUPPLY

2.1. its is a relationship between a product's price and quantity supplied

2.2. the law of supply states there is a direct relationship between price and quantity supplied

3. MARKET EQUILIBRIUM

3.1. when a product is in surplus

3.1.1. there is excess supply

3.1.2. price is pushed down

3.2. when a product is in shortage

3.2.1. there is excess demand

3.2.2. price is pushed up

4. FACTORS INFLUENCING DEMAND

4.1. price of good

4.2. consumers's income

4.3. taste and fashion

4.4. expectation about future prices

4.5. population or number of buyer

4.6. festival seasons and climate

4.7. advertisment

5. CHANGE IN DEMAND AND QUANTITY DEMANDED

5.1. a change in demand means that the entire demand curve shifts either left or right

5.2. caused by a shift in tastes, changes in population, changes in income, prices of substitute or complement goods, or changes future expectations.

5.3. a change in the quantity demanded refers to movement along the existing demand curve, this is a change in price

5.4. caused by a shift in the supply curve

6. FACTORS INFLUECING SUPPLY

6.1. price of goods

6.2. cost of production

6.3. expected future prices

6.4. technological advancement

6.5. number of seller

6.6. goverment policies

6.7. improvment in infrastructure

7. CHANGE IN SUPPLY AND QUANTITY SUPPLIED

7.1. a change in supply means that the entire supply curve shifts either left or right

7.2. caused by production conditions, changes in input prices, advances in technology, or changes in taxes or regulations.

7.3. a change in the quantity supplied refers to movement along the existing supply curve

7.4. change in price, caused by a shift in the demand curve.