LESSON 2.

A00

ECONOMIC
DEMAND & SUPPLY
OVERVIEW OF MARKET PARTICIPANTS
INTRODUCTION
 DEMAND
DEMANDERS SUPPLIERS
Buy Product Sells Product
or Factor of Factor
Product Product

SUPPLY
 DEMAND
DEMANDERS DEMANDERS
WANTS TO AFTER WANTS TO
HAVE LOW NEGOTIATION,
HAVE HIGH
THERE WILL
BUYING ARRIVE TO THE SELLING
AGREEABLE
PRICE PRICE PRICE

SUPPLY
COMMENTARY:
Usually not too high, not too
low
FUNDAMENTALS OF
LAW OF SUPPLY AND
LAW OF DEMAND
THE LAW OF
DEMAND
When prices rise,
the quantity of demand falls.
“I can buy less if its pricy.”

Price
“I can buy more it its cheap”

#inverse_relationship Qd1 Qd2 Qd3 Qd4

Quantity
THE DEMAND
FUNCTION
To compute the value of
Demand at certain price,
we use a mathematical
function

Price
QD = f(P)
Qd1 Qd2 Qd3 Qd4

Quantity
THE DEMAND THE DEMAND
FUNCTION SCHEDULE
To compute the value of PRICE QUANTITY DEMANDED
Demand at certain price, (INPUT) (RELATION) (OUTPUT)
we use a mathematical
function 4 10 - (4/2) 8
8 10 - (8/2) 6
QD = f(P)
16 10 - (16/2) 2
QD = 10 - [p/2]
THE DEMAND GRAPH
[Product Name’s] Demand
9
PRICE QD 8
(INPUT) (OUTPUT) 7

4 8 5

PRICE
4

8 6 3

16 2 1

0
0 2 4 6 8 10 12 14 16 18
QUANTITY (DEMANDED)
THE LAW OF
SUPPLY
When prices of product rise,
the quantity of supply rise.
“I want to sell more if its pricy.”

Price
#direct_relationship
Qs1 Qs2 Qs3 Qs4

Quantity
THE LAW OF
SUPPLY
To compute the value of
Supply at certain price,
we use a function:
QS = f(P)

Price
Qs1 Qs2 Qs3 Qs4

Quantity
THE LAW OF THE SUPPLY
SUPPLY SCHEDULE
To compute the value of PRICE QUANTITY
Supply at certain price, (INPUT) SUPPLIED
(OUTPUT)
we use a function:
QS = f(P) 4 12
8 14
QD = 10 + [p/2]
16 18
QD = 10 + [p/2] THE SUPPLY GRAPH
[Product Name’s] Supply
20
PRICE QS 18
(INPUT) (OUTPUT) 16
14

4 12 12

PRICE
10

8 14
8
6
4
16 18 2
0
0 2 4 6 8 10 12 14 16 18
QUANTITY (SUPPLIED)
 CANDY DEMAND AND SUPPLY

EQUILIBRIUM 20

18

PRICE 16

14

Is a price in which 11 12

quantity demanded
10

8
is equal to 6

quantity supplied. 4

PRICE
2

0
0 1 2 3 4 5 6 7 8 9 10
QUANTITY (DEMANDED OR SUPPLIED)

Qty Supply Qty Demand

EQUILIBRIUM
PRICE
Is a price in which
quantity demanded
is equal to
𝑄𝑑 = 𝑄𝑠
quantity supplied.