Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 2A: Resource allocation (Non-price determinants of supply (Changes…
Chapter 2A: Resource allocation
Theory of Demand: Demand is defined as the quantity of a product that consumers are both willing & able to buy at a given price during a period of time, ceteris paribus
Non-price determinants of demand
Changes in consumers' taste & preference
Changes in number of consumers
Changes in consumers' expectations
Government policies
Changes in price of related goods
Complements in consumption are goods used in conjunction with one another in satisfaction of a particular purpose
Substitutes in consumption are goods that can be used in place of one another for satisfaction of a particular purpose
Changes in consumers' income
Theory of Supply: It shows that quantity supplied of a well-defined commodity/ product that producers are both willing & able to sell at each possible price during a given period of time, ceteris paribus
Non-price determinants of supply
Changes in technology
Number of sellers
Expectation of future price changes
Changes in price of related goods
Complement
Substitute
Government policies
Nature & other unpredictable events
Changes in cost of relevant resources
Surplus
Consumer surplus: is the difference between how much consumers in the market are prepared to pay & how much they actually pay
Producer surplus: is the differencce between the price that producers that produces in the market are prepared to sell good/ service & how much the actually receive