Please enable JavaScript.
Coggle requires JavaScript to display documents.
Demand, Supply and Market Equilibrium - Coggle Diagram
Demand, Supply and Market Equilibrium
DEMAND
Law of Demand:
Inverse Relationship between Price and Quantity demanded
Diminishing Marginal Utility
Satisfaction of a Product
Income and Substitute Effect
Income Effeet
Lower the Price = Increase Buying power of purchaser
Higher Price = Reduces powe of Purchase
Substitute Effect
Incentive to by a similar product due to increase in cost of usual product.
Price is an Obstacle for the Purchaser
Price Decrease = Increase in Demand
Price Increase = Decrease in Demand
Changes in Demand
Change in income
Normal Goods vs Inferior Goods
Change in Price of relate goods
Complimentary Goods vs Substitute goods
Number of Buyers
Change in Consumer Expectations
Future prices vs Future Income
Tastes and Preferences
Change in Demand = Shift of Demand Curve.
Change in Quantity Demanded = Movement along the Curve
Demand Curve
Amount consumers are willing and able to Spend at a given price
Individual Demand vs Market Demand
SUPPLY
Amount Producers are willing and Able to Sell at a given price
Supply Curve
Individual Supply Vs Marker Supply
Law of Supply
Price is Positive for Supplier
Price Increase = Increase in Supply
Price decrease = Decrease in Supply
Changes in Supply
Number of Sellers
Taxes and Subsidies
Technology
Prices of other Goods
Resource prices
Producer Expectation
Change in Supply = Shift of Supply Curve.
Change in Quantity Supplied = Movement along the curve
MARKET EQUILIBRIUM
Occurs when Supply = Demands
Equilibrium Price
Price where Intentions of Buyers = Sellers
Equilibrium Quantity
Quantity at which intentions of buyers and sellers match
Neither a Shortage or a Surplus
Surplus Drives prices down
Shortage drives demand up
Efficient Allocation
Productive Efficiency:
using resources sufficiently
Allocative Proficiency:
Produce right combination of goods
Demand Reflects Marginal Benefit (MB)
Production can take please when MB=MC
Supply Reflects Marginal Cost (MC)
Government Set Prices:
Price Ceiling: No Higher charge. Designed to Help Consumers
Price Floor: No Lower Charge.
Designed to help Producers
MARKETS
Interaction Between Buyers and Sellers
Due to Interaction, Price is discoverd
Type of Markets
Local Market: ie Farmers Market
National Marker: Ie: Real Estate Market
International Market: ie NY Stock Exchange