DEMAND - quantity of a commodity purchased at a given price and Composite demand

time.
LAW OF DEMAND - Inverse relationship between the price of a Reason for downward slope: Marginal utility, substitution effect,
commodity & it's quantity demanded, ceteris paribus ・the higher income effect, fall price
the price, the lower the demand & vice versa.
QDEMANDED FOR C/S - the total amount of a g/s that consumer's Exception to law of demand: giffen goods, snob appeal,
demand over a given interval of time psychological basis or illusion, in case of life saving Essential
DEMAND SCHEDULE - Statistical Functional relationship of the price goods/extraordinary circumstances.
of a commodity and its quantity demanded ceteris paribus.
DEMAND CURVE - plotting the demand schedule on graph; may be Degree of Price elasticity of D:
linear or non-linear depending on the nature of demand function. Elastic >1 luxury
SAMUELSON Picturization of demand schedule. Inelastic<1 necessity
∆ in QDEMANDED FOR C/S - relates to the law of demand will Unitary Elastic = 1 either L or N
reference to extension or contraction of demand." - takes place only Perfectly Elastic= infinity extremely luxury
in response to the own price of the commodity - price demand. Perfectly Inelastic = 0 extremely necessity
EXTENTION OF DEMAND - a downward movement from one point
to another on the same demand curve. more quantity is demanded Income elasticity
at lower price... Normal = +
CONTRACTION OF DEMAND - upward movement from one point to Inferior= -
another on the same demand curve. less quantity at higher price. Either N or I = 0
CHANGE IN DEMAND is related to increase or decrease in demand. a
shift in consumer desire to purchase a particular g/s, irrespective of Cross elasticity
a variation in its price. Substitute= +
DETERMINANTS OF DEMAND -include both price and non-price Complementary = -
factors and they are responsible for bringing changes in quantity No relationship= 0
demanded and changes in demand.
ELASTICITY OF DEMAND -describes the quantitative aspects
regarding the inverse relationship between P&D. MARSHAL: The
elasticity or responsiveness of demand in a market is large or small
acc. to the amount demanded increases as much or little for a given
rice in price. BOULDING: The percentage change in the quantity
demanded w/c would result in one percent change in P. ROBINSON:
The FOFD at any price or at any output is equal to the proportional
orange of amount demanded in response to a small change in price
divided by the proportional change in price.
SUPPLY - quantities that a seller is willing and able to sell at different
prices.; "ready to offer for sale"
LAW OF SUPPLY - Ceteris paribus, as price lives the quantity offered
increases, and as it falls the quantity offered deact -supply varies
directly w/ price-
∆ QSUPPLIED FOR G/S - the quantity sellers are willing to fell at a
particular price during a particular period, all other things
unchanged.
SUPPLY SCHEDULE - shows the quantities supplied at different prices
during a particular period, all other things unchanged.
SUPPLY CURVE- a graph that shows how a change in the price of a
g/s affects the quantity a Seller supplies Price = y-axis ; Qs = x-axis
∆ IN QUANTITY SUPPLIED OF GAS - movement along the supply
curve, which is caused only by a change in price.
EXTENSION OF SUPPLY - occurs when the supply of a commodity
rises solely as a result of an increase in the commodity's price.
UPWARD SHIFT to the RIGHT.)
CONTRACTION OF SUPPLY -occurs when the supply of a commodity
reduces solely as a result of a decrease in the price of that
commodity. DOWNWARD TREND to the LEFT.
CHANGE IN SUPPLY when the suppliers of a given g/s alter
production or output. -can occur as a result of new technology or
change in the number of competitors ·
DETERMINANTS OF SUPPLY - Factors that influence the supply of
certain g/s. -Factors that directly affect the supply of a g/s.
ELASTICITY OF SUPPLY - measures the responsiveness to the supply
of a g/s after a change in its market price. -the percentage change of
Qs resulting from a 1% change in price.

Types of demand: Price demand, income, cross, derived, joint,