Demand and supply analysis. The demand curve The demand curve: The demand for potatoes (monthly)

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Presentation transcript:

Demand and supply analysis

The demand curve

The demand curve: The demand for potatoes (monthly)

Market demand for potatoes (monthly) Quantity (tonnes: 000s) Price (cents per kg) Demand Price (cents per kg) 4 Market demand (tonnes 000s) 700 A Point A

Quantity (tonnes: 000s) Price (cents per kg) Demand Price (cents per kg) 4 8 Market demand (tonnes 000s) ABAB Point A B Market demand for potatoes (monthly)

Quantity (tonnes: 000s) Price (cents per kg) Demand Price (cents per kg) Market demand (tonnes 000s) ABCABC Point A B C Market demand for potatoes (monthly)

Quantity (tonnes: 000s) Price (cents per kg) Demand Price (cents per kg) Market demand (tonnes 000s) ABCDABCD Point A B C D Market demand for potatoes (monthly)

Quantity (tonnes: 000s) Price (cents per kg) Demand Price (pence per kg) Market demand (tonnes 000s) ABCDEABCDE Point A B C D E Market demand for potatoes (monthly)

Demand and supply analysis Shifts in the demand curve Shifts in the demand curve

D0D0 Price P OQ0Q0 Quantity An increase in demand

Price P O Quantity D0D0 Q0Q0 An increase in demand

Price P O Quantity D0D0 Q0Q0 D1D1 Q1Q1 An increase in demand

Price P O Quantity D0D0 Q0Q0 A decrease in demand

Price P O Quantity D0D0 Q0Q0 Q2Q2 D2D2 A decrease in demand

Demand and supply analysis The supply curve

The supply curve: The supply of potatoes (monthly)

Price (cents per kg) Quantity (tonnes: 000s) Supply Market supply of potatoes (monthly)

Price (cents per kg) Quantity (tonnes: 000s) Supply a P 4 Q 100 a Market supply of potatoes (monthly)

Price (cents per kg) Quantity (tonnes: 000s) Supply a b P 4 8 Q abab Market supply of potatoes (monthly)

Price (cents per kg) Quantity (tonnes: 000s) Supply a b c P Q abcabc Market supply of potatoes (monthly)

Price (cents per kg) Quantity (tonnes: 000s) Supply a b c d P Q abcdabcd Market supply of potatoes (monthly)

Price (cents per kg) Quantity (tonnes: 000s) Supply a b c d e P Q abcdeabcde Market supply of potatoes (monthly)

Demand and supply analysis Shifts in the supply curve Shifts in the supply curve

Shifts in the supply curve P QO S0S0

P QO S0S0 S1S1 Increase Shifts in the supply curve

P QO S2S2 S0S0 S1S1 IncreaseDecrease Shifts in the supply curve

Demand and supply analysis Equilibrium

Equilibrium price and output : The Market Demand and Supply of Potatoes (Monthly)

The determination of market equilibrium (potatoes: monthly) Quantity (tonnes: 000s) Price (cents per kg) E D C B A a b c d e Supply Demand

Quantity (tonnes: 000s) Price (cents per kg) E D C B A a b c d e Supply Demand SHORTAGE ( ) The determination of market equilibrium (potatoes: monthly)

Quantity (tonnes: 000s) Price (cents per kg) E D C B A a b c d e SURPLUS ( ) Supply Demand The determination of market equilibrium (potatoes: monthly)

Quantity (tonnes: 000s) Price (cents per kg) E D C B A a b c d e QeQe PePe Supply Demand The determination of market equilibrium (potatoes: monthly)

Demand and supply analysis Effect of a shift in the demand curve Effect of a shift in the demand curve

Effect of a shift in the demand curve P Q O Pe1Pe1 Qe1Qe1 S D1D1 g

P Q O Pe1Pe1 Qe1Qe1 S D1D1 D2D2 g An increase in demand

P Q O Pe1Pe1 Qe1Qe1 S g h D1D1 D2D2 Effect of a shift in the demand curve

P Q O Pe1Pe1 Pe2Pe2 Qe1Qe1 Qe2Qe2 S g h i D1D1 D2D2

P Q O Pe1Pe1 Qe1Qe1 S D1D1 g

P Q O Pe1Pe1 Qe1Qe1 S D1D1 D2D2 g A decrease in demand

P Q O Pe1Pe1 Qe1Qe1 S D1D1 D2D2 g Effect of a shift in the demand curve Pe2Pe2 Qe2Qe2 n m

Demand and supply analysis Effect of a shift in the supply curve Effect of a shift in the supply curve

Effect of a shift in the supply curve P Q O Pe1Pe1 Qe1Qe1 D S1S1 g

P Q O Pe1Pe1 Qe1Qe1 D S1S1 g An increase in supply S2S2

Effect of a shift in the supply curve P Q O Pe1Pe1 Qe1Qe1 D S1S1 g S2S2 p

P Q O Pe1Pe1 Qe1Qe1 D S1S1 g S2S2 p Pe2Pe2 Qe2Qe2 q

P Q O Pe1Pe1 Qe1Qe1 D S1S1 g

P Q O Pe1Pe1 Qe1Qe1 D S1S1 S2S2 g A decrease in supply

P Q O Pe1Pe1 Qe1Qe1 D S1S1 S2S2 jg Effect of a shift in the supply curve

P Q O Pe1Pe1 Pe3Pe3 Qe3Qe3 Qe1Qe1 D S1S1 S2S2 jg k

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