Demand & Supply

1. Demand factors

2. Availability of related goods

3. Expectation of future price changes

4. Substitute goods are in competitive demand (Eab>0)

4.1. Changes in population and its structure

5. Complementary goods are in joint demand (Eab<0)

6. Changes in levels and distribution of income

7. Demand schedule is a table representing points on a demand curve

8. is the willingness, desire and ability to buy a good

9. Opportunity cost is what could've been bought in place of that good itself

10. Shifts are changes in demand, movements are changes in price resulting from quantity demanded

11. Demand

11.1. Changes in taste/preferences

12. Laws

12.1. Law of demand: Price is inversely proportional to quantity demanded

12.2. Law of diminishing marginal utility: increase in satisfaction decreases with each additional unit consumed

13. Equilibrium price is the intersection of demand and supply curves

13.1. where quantity supplied = quantity demanded

13.2. a point where demand and supply settles, and have a tendency to remain at that point, ceteris paribus

13.3. where there is allocative efficiency and both producers and consumers are happy, welfare is maximised

14. H2: Consumer and producer surplus

14.1. Consumer surplus: The difference between what consumers are willing and able to pay for a good and what they actually pay for it

14.2. Area below the demand curve to the price line

14.3. Producer surplus: the difference between the cost price of the good and the price they receive

14.4. Area below the price line and above the supply curve

15. Supply

15.1. Supply schedule is a table representative of the points of a SS curve

15.2. Is the desire to produce a certain good backed by willingness and ability to do so

15.3. A shift in the supply curve is a change in supply, but a movement along the curve is a change in quantity supplied resulting from a change in price of the good itself

15.4. Supply factors

15.5. Marginal cost of production

15.6. Changes in production of related goods

15.7. Natural disasters, unpredictable events

15.8. Speculation

16. Laws

16.1. Law of supply: Price is directly proportional to quantity supplied

16.2. Law of diminishing marginal returns: as output increases, marginal costs increases, as more workers means lees capital to work with, explaining the upward sloping SS curve

17. Any shifts away from equilibrium will result in DD and SS adjusting until a new equilibrium is reached

17.1. A shift in SS to the right will cause a surplus and put a downward pressure on price, ceteris paribus

17.2. A shift in DD to the right will cause a shortage and put upward pressure on prices, ceteris paribus

17.3. When there is shifting of both DD and SS in the same direction, the magnitude of the shift would determine the direction of pressure on prices