Supply and demand. Market equilibrium. Lecture number 7 Supply and demand. Market equilibrium.

The plan: Basis of the mechanism of market self-regulation; The market mechanism of competitive equilibrium; The content and form of market equilibrium.

1. Basis of the mechanism of self-regulation of the market is supply and demand. Demand - A form of expression of needs, available on the market and provide the appropriate cash-governmental means.

The market operates the objective law of demand The market operates the objective law of demand. If the prices rise, the demand decreases.

Value of goods sold in the market:

Demand is influenced by the following factors: The level of income in the society; Market size of the product; availability of interchangeable goods; objective tastes Buyer;

Proposal - is aggregate of goods in the market or are likely to be produced and presented to lennymi for sale on relevant, satisfies the producer prices.

Determined by laws of supply relationship between the market price and quantity, the product conductivity and offered for sale.

Value, quantity supplied to the market and offer for sale of goods within a fixed unit of time.

To offer the following factors: The price of manufactured products; The level of profit; Lower production costs, provides: a) by NTP; b) the degree of monopolization of the market; c) the movement of the price of other goods, ie interchangeability.

2. The equilibrium market price is at a point of intersection of the supply and demand curves. Price equilibrium price should consider the level at which the proposal is consistent with the demand.

The equilibrium price is established under two conditions: When the amount that the buyer wants to buy corresponds to the amount that is pro-davtsy want to sell; No tendency to changes in price and quantity.

Supply and Demand Experiencing the impact of multiple factors and different ways to react to them. The degree of changes in demand and supply under the influence of a factor characterized by their flexibility.

Elasticity of demand - is the degree of reaction purchased an amount of goods on vibrational banie its market price.

Quantitatively and qualitatively, the elasticity of demand can be represented by three factors: Percent decrease in price => per cent increase product sales => total revenue increases. The elasticity of demand> 1. Percent decrease in price = increase in the number of sales => revenue unchanged. The elasticity of demand = 1. Price reduction => slight increase in the number of sales => revenue declines. Inelastic demand. 0 <elasticity <1.

Supply elasticity describes the changes between the price and offers for the sale of goods, as well as the relative change in the volume of production and supply of goods in connection with the movement of the price in the market.

Coefficient of elasticity of - is the percentage change in the quantity of goods to the percentage change in the price of goods.

Instant harmony - when the offer consistently; 3. In theory, market equilibrium, given to the importance of time. From this point of view are distinguished: Instant harmony - when the offer consistently; Short-run equilibrium - when supply increases without an increase in the equipment; Prolonged balance of the normal price - when businesses replace and enhance equipment, and the number of the enterprises themselves can change due to free entry and exit from the industry.

Price extended equilibrium slightly below the price of short-term balance and significantly lower prices instantaneous equilibrium. This case is called the case of growing costs.