Demand – willingness & ability of buyers to purchase diff quantities of goods at diff prices during specific time

period, ceteris paribus

Quantity demanded – the amount of a good that individuals r willing n able to buy at a particular price during a
specific time period
Individual/Market demand curve - Combination of p & qd for a single buyer/all buyers
Determinants of demand – PPICAO
Sub goods - satisfy same basic wants
Price of complements – consumed tgt
Income – Income rise, buying ability rise
Normal good – positively
Inferior good – inversely (old car)
Essential – not so related (demand constant)
Consumer behaviour – Cardinal(marginal utility analysis) & Ordinal(cannot be measured, using indifference curve
analysis)
Cardinal – the amount of satisfaction can be measured in cardinal numbers. Indicate quantity, not order.
TU – total amt of satisfaction obtained from consuming g/s. higher consumption, higher TU.
MU – additional satisfaction obtained from the consumption of one more unit of g/s (change in TU/change in Q)
Criticism – Not possible, hard to explain your preference and satisfaction
Ordinal – Ranks various combos of goods according to consumer’s preference
Supply – willingness & ability of sellers to produce diff quantities of goods at diff prices during specific time period,
ceteris paribus
Quantity supplied – amount of a good that producers r willing n able to produce ‘’
Determinants of supply – NCTPCO
Market equilibrium – no tendency to change , Qd=Qs
Excess of supply – Qs>Qd price increase
Excess of demand – Qd>Qs price decrease
PED – Measure of the responsiveness of Qd of a good to a change in its P, ceteris paribus.
 PED = 0 perfectly inelastic (cancer medicine)
 PED = infinite perfectly elastic (gold)
 PED = 1 unitary elastic (% not amt, does not exist)
 PED > 1 elastic
 0 > PED > 1 inelastic
Determinants of price elasticity of demand – PLSHIT
Total revenue – all the money that all the customers give/sellers receive as payments to sellers for a particular g/s
(pxq)
Relationship btw elasticity & TR
 elastic, fall in price, increase in total revenue (bc ppl wanna buy cheap) (gelato mahal)
 inelastic, fall in price, fall in total revenue (experience loss cuz nobody care abt cheap ice cream)
PES - Measure of the responsiveness of Qs of a good to a change in its P, ceteris paribus
 PES = 0 perfectly inelastic (Mona Lisa)
 PES = infinite perfectly elastic (Sand)
 PES = 1 unitary elastic (% not amt, does not exist) *origin
 PES > 1 elastic (manufactured goods)
 0 > PED > 1 inelastic (raw material)
Determinants of price elasticity of supply – CRAPT
XED>0 – Substitutes
XED<0 – compliments
XED=0 – Unrelated
YED>0 – Normal
YED<0 – Inferior
YED = 0 - Necessity