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CHAPTER 2: DEMAND AND SUPPLY
DEFINITION / CONCEPT
DEMAND: QUANTITY OF GOODS THAT CONSUMERS ARE WILLING ABLE TO BUY
AT A CERTAIN PRICE LEVEL.
SUPPLY: QUANTITY OF GOODS THAT SELLERS ARE WILLING TO SELL AT
CERTAIN PRICE LEVEL
SUBSTITUTE GOODS: GOODS THAT GIVE THE SAME SATISFACTION
COMPLEMENTARY GOODS: GOODS JOINTLY DEMAND TOGETHER
NORMAL GOODS: WHEN INCOME INCREASE THE QUANTITY DEMANDED
INCREASE
INFERIOR GOOD: WHEN INCOME INCREASE THE QUANTITY DEMANDED
DECREASE
LAW
DEMAND: WHEN PRICE INCREASE THE QUANTITY DEMANDED DECREASE; VICE
VERSA (-VE R/SHIP)
SUPPLY: WHEN PRICE INCREASE THE QUANTITY SUPLIED INCREASE; VICE
VERSA (+ VE R/SHIP)
DETERMINANTS:
DEMAND
• PRICE OF GOOD ITSELF
• PRICE OF OTHER GOODS
• BUYER’S INCOME
• TASTE OF BUYERS
• NUMBER OF POPULATIONS
