The Market Forces of Supply and Demand
Wednesday, 03 September 2025
14:52
Spply and Demand:
- driving force of market economies
- Determine the quantity and price of goods
- refer to the bevaiour of market paricipants (buyer/seller) on the market
Market:
- group of buyers (deterine demand) and sellers (determine supply)
- Competitive Market:
○ Noone has the power to influence the market by themselves
○ buyers have multiple options for the same product
○ market price is collectivly made by buyers and sellers
Demand:
- Quantity: The amount of goods buyers can and want to buy
○ dtermined by: price, consumers income/taste/expectations
-
Law of Demand: price of goods rises --> demand falls (vice versa)
Demand schedule: table that shows relation between price nad demand
Demand curve: graph resulting from demand table
Normal good: increase in income --> increase in demand
Inferior good: increase in income --> decrease in demand
Substitutes: two or more goods for which an increase in the price of one leades to an increase
in the demand for the others
- Comlimentariy: two or more goods for which an increase in the frice of one leades to a
decrease in the demand for the others
- Market Demand:
○ sum of all individual demands for good/service
Supply:
- Quantity: Amount of good that sellers are willing and able to sell
○ Deterimined by: price, manufacturing price, ...
-
the quantity supplied of a good rises when the price of a good rises
Supply schedule: table which shows relationship between price and quantity supplied
Supply curve: graph resulting from supply table
Factors that shift supply curve: Input pricces, Technology, Expectation, Number of sellers
Market Supply: The sum of supplies of all sellers
Supply and Demand togehter:
- Law of supply and demand: the clain that the price of any good adjusts to bring the quantity
supplied and the quantity demanded fot that good into balance
ECON 1201 Page 1