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Chapter 3 Theory of Demand & Supply - Coggle Diagram
Chapter 3 Theory of Demand & Supply
Demand
Change in quantity demanded VS Change in demand
factors affecting
Change in consumers' income
Normal goods
Inferior goods
Change in price of related goods
Change in price of substitutes
Change in price of complements
Goods in derived demand
Change in consumers' tastes and preferences
Change in government economic policies
Expectations of future price changes
Change in availability of credit facilities and hire purchases
Change in seasons
Supply
Change in quantity supplied VS Change in supply
factors affecting
Change in price of factor inputs
Change in production of related goods
Goods in competitive supply
Goods in joint supply
Change in state of technology
Change in government policy
Expectations of future price changes
Change in weather conditions
Price determination in the product market
Market equilibrium
Qd=Qs
No shortage/surplus
Allocative efficiency
Total surplus
Producer surplus
Consumer surplus
When total surplus is maximum
Market disequilibrium
Shortages
causes
Unanticipated rise in demand
Unanticipated reduction in supply
Underestimation of demand by producers
Government intervention e.g. price ceiling
effects
Queueing
Panic buying and rationing
Formation of resale and black market
Surpluses
causes
Unanticipated rise in supply
Unanticipated fall in demand
Overestimation of demand by producers
Government intervention e.g. price floor
effects
Wastage of resources
Storage costs for firms