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Demand and supply, Determinants, lol, 1.Time - Coggle Diagram
Demand and supply
Determinants of demand: There are other factors that can influence the level of demand
of a particular good or srvice, but this are the ones that affect them commonly:
1.Habits, fashions and tastes
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Movements along a supply curve: occurs only if the price of the product changes. A change in price alone causes a change in the quantity supplied
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Price determination
Market equilibrium: refers to the position where the demand for a product is equal to the supply of the product. At this point, an equilibrium price is established.
At the equilibrium price, there is neither excess quantity demanded nor excess quantity supplied, and thus the equilibrium quantity is determined.
Effective Demand:
Is the willingness and the ability of customers to pay a given price to buy a good or service
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Price and Demand : The demand curve is shown as a downward-sloping curve to indicate the inverse relationship between price and quantity demanded
Movements along a demand curve: a change in the price of a good or service causes a movement along the demand curve. A price rise will cause a contraction in demand for the product. In the other hand, a reduction in price will cause an extension in the quantity demanded.
Individual demand and market demand:
Market demand refers to the aggregation of all individual demand for a product. It is found by adding up all individual demand at each price level
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*Conditions of supply: Increase in supply: a change in any of the non-price factors that affect the supply of a good or service will cause a shift in the supply curve. Decrease in supply: is a leftward shift of the supply curve
Individual supply and market supply: the market supply is the aggregation of all supply at each price level. Hence, the market supply is found by adding up all individual supply at each price level.
Market disequilibrium: occurs when the quantity demanded for a product is either higher or lower than the quantity supplied. There are either shortages or surpluses.
Shortages: if the selling price of a product is set too low the demand will exceed supply. This excess demand creates a shortage in the market. The excess demand will tend to cause price to rise back towards the point of equilibrium as before.
Surpluses: if the price is set too high, then supply will exceed demand. This results in a surplus, known as excess supply. In order for firms to get rid of their excess supply they will need to reduce price.
Law of supply: states that there is a positive relationship between price and the quantity supplied of a product. Hence, a supply curve is drawn as upward sloping from left to right.
Determinants
Determinants of supply: non-price factors that affect the level of supply of a product can be remembered by the acronym TWO TIPS:
1.Time
2.Weather
3.Opportunity cost
4.taxes
5.Innovations
6.production costs
7.subsides
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