Demand Supply ApproachDemand Supply Approach

Supply and Demand Analysis 1. The demand schedule 2. The demand curve 3. Demand shift s

Elasticity of demand 4. Price elasticity of demand 5. C alculating elasticities 6. Elasticity and revenue 7. Income elasticity of demand 8. Cross elasticity of demand 9. Analysis of supply 10. The supply schedule 11. The supply curve 12. Behind the supply curve 13. Shift in supply 14. Pr ice elasticity of supply Equilibrium of supply and demand curves 15. Equilibrium with supply and demand curves 16. Effect of shift in supply or demand 17. Interpreting the changes in prices and quantity 18. Simultaneous shift in supply and demand 19. Rationing by prices

A pplying supply and demand 20. Impact of a Tax on price and quantity

Prices fixed by law 21. Minimum floor and maximum ceilings

Demand Function Demand Function Amount of goods that a consumer is willing top buy and able to purchase over a period of time is known as quantity demanded for that goodFlow conceptDemand is relationship between price and quantity demanded other things remaining constantX1 = f {P1}

Demand Schedule Demand Schedule Price

Quantity Demanded

500 10 lakhs

450 11 lakhs

400 12 lakhs

350 13 lakhs

300 14 lakhs

250 15 lakhs

200 16 lakhs

150 17 lakhs

Demand CurveDemand CurvePri

ce

Demand

Demand Curve

0

Y

X

Law of Demand Law of Demand Demand curve depicts the inverse relationship between price and quantity demanded Downward slopingOther things remaining the same, if the price of any good decreases its quantity demanded increases and vice versaExceptions – Giffen Goods, Veblen effect, Future expectations, share market

Factors influencing the Demand CurveFactors influencing the Demand Curve

Prices of close substitutes and complementsIncome of the consumerExisting wealth of the consumerChange in the testes and preferences of the consumer Expectations regarding future changes in the pricesPopulationSpecial influence – season, law

Increase in Demand (Shift in demand curve) Increase in Demand (Shift in demand curve)

An increase in incomeAn increase in wealthAn increase in prices of substitutesA decrease in the prices of complementsA change in the taste and preferences in favor of goodExpectations of a future increase in price of a good

Increase in demandIncrease in demandY

0 X

Old Demand Curve

New DemandCurve

Pri

ce

Quantity Demanded

Decrease in Demand (Shift in demand curve) Decrease in Demand (Shift in demand curve)

An Decrease in incomeAn Decrease in wealthAn Decrease in prices of substitutesA Increase in the prices of complementsA change in the taste and preferences against the goodExpectations of a future decrease in price of a good

Decrease in demandDecrease in demandY

0 X

Old Demand Curve

New DemandCurve

Pri

ce

Quantity Demanded

Changes in Quantity Demanded vs. Changes in DemandChanges in Quantity Demanded vs. Changes in Demand

Changes in quantity demandedP

P2

P1

0Q1 Q2

D

D

X

Changes in demanded

P

P2

P1

0Q1 Q2

D

D

D1

D1

X

Campus OverviewCampus Overview

907/A Uvarshad, GandhinagarHighway, Ahmedabad – 382422.

Ahmedabad Kolkata

Infinity Benchmark, 10th Floor, Plot G1,Block EP & GP, Sector V, Salt-Lake, Kolkata – 700091.

Mumbai

Goldline Business Centre Linkway Estate, Next to Chincholi Fire Brigade, Malad (West), Mumbai – 400 064.

Thank YouThank You