Demand and supply analysis. The demand curve The demand curve: The demand for potatoes (monthly)

Demand andsupply analysis

Demand andsupply analysis

Demand and supply analysisDemand and supply analysisDemand and supply analysisDemand and supply analysis

The demand curveThe demand curve

The demand curve:The demand curve:The demand for potatoes (monthly)The demand for potatoes (monthly)

(1) (2) (3) (4) Price

(cents per kg) Tracey's demand

(kg)

Darren's demand

(kg)

Total market demand

(tonnes : 000s )

A 4 28 16 700

B 8 15 11 500

C 12 5 9 350

D 16 1 7 200

E 20 0 6 100

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

Market demand for potatoes (monthly)Market demand for potatoes (monthly)

Quantity (tonnes: 000s)

Pri

ce (

cen

ts p

er

kg)

Demand

Price(cents per kg)

4

Market demand(tonnes 000s)

700A

Point

A

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800


Pri

ce (

cen

ts p

er

kg)

Demand

Price(cents per kg)

4

8


700

500

A

B

Point

A

B


0

4

8

12

16

20

0 100 200 300 400 500 600 700 800


Pri

ce (

cen

ts p

er

kg)

Demand

Price(cents per kg)

4

8

12


700

500

350

A

B

C

Point

A

B

C


0

4

8

12

16

20

0 100 200 300 400 500 600 700 800


Pri

ce (

cen

ts p

er

kg)

Demand

Price(cents per kg)

4

8

12

16


700

500

350

200

A

B

C

D

Point

A

B

C

D



Pri

ce (

cen

ts p

er

kg)

Demand

Price(pence per kg)

4

8

12

16

20


700

500

350

200100

A

B

C

D

E

Point

A

B

C

D

E

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800



Shifts inthe demand curve

Shifts inthe demand curve

D0

Pri

ce

P

O Q0

Quantity

An increase in demandAn increase in demand

Pri

ce

P

O

Quantity

D0

Q0


Pri

ce

P

O

Quantity

D0

Q0

D1

Q1


Pri

ce

P

O

Quantity

D0

Q0

A decrease in demandA decrease in demand

Pri

ce

P

O

Quantity

D0

Q0Q2

D2

A decrease in demandA decrease in demand


The supply curveThe supply curve

The supply curve:The supply curve:The supply of potatoes (monthly)The supply of potatoes (monthly)

Price ofpotatoes

(pence per kg)

Farmer X'ssupply(tonnes)

Total Marketsupply

(tonnes: 000s)

a 4 50 100

b 8 70 200

c 12 100 350

d 16 120 530

e 20 130 700

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

Pri

ce (

cen

ts p

er

kg)


Supply

Market supply of potatoes (monthly)Market supply of potatoes (monthly)

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

Pri

ce (

cen

ts p

er

kg)


Supply

a

P

4

Q

100a


0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

Pri

ce (

cen

ts p

er

kg)


Supply

a

b

P

4 8

Q

100200

ab


0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

Pri

ce (

cen

ts p

er

kg)


Supply

a

b

c

P

4 812

Q

100200350

abc


0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

Pri

ce (

cen

ts p

er

kg)


Supply

a

b

c

d P

4 81216

Q

100200350530

abcd


Pri

ce (

cen

ts p

er

kg)


Supply

a

b

c

d

e

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

P

4 8121620

Q

100200350530700

abcde



Shifts inthe supply curve

Shifts inthe supply curve

Shifts in the supply curveShifts in the supply curveP

QO

S0

P

QO

S0 S1

Increase

Shifts in the supply curveShifts in the supply curve

P

QO

S2 S0 S1

IncreaseDecrease

Shifts in the supply curveShifts in the supply curve


EquilibriumEquilibrium

Equilibrium price and outputEquilibrium price and output::The Market Demand and Supply of Potatoes (Monthly)The Market Demand and Supply of Potatoes (Monthly)

Price of Potatoes(pence per kilo)

Total Market Demand(Tonnes: 000s)

Total Market Supply(Tonnes: 000s)

4 700 (A) 100 (a)

8 500 (B) 200 (b)

12 350 (C) 350 (c)

16 200 (D) 530 (d)

20 100 (E) 700 (e)

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800

The determination of market equilibriumThe determination of market equilibrium (potatoes: monthly)(potatoes: monthly)


Pri

ce (

cen

ts p

er

kg)

E

D

C

B

Aa

b

c

d

e

Supply

Demand

0

4

8

12

16

20

0 100 200 300 400 500 600 700 800


Pri

ce (

cen

ts p

er

kg)

E

D

C

B

Aa

b

c

d

e

Supply

Demand

SHORTAGE

(300 000)


0

4

8

12

16

20

0 100 200 300 400 500 600 700 800


Pri

ce (

cen

ts p

er

kg)

E

D

C

B

Aa

b

c

d

e

SURPLUS

(330 000)

Supply

Demand


0

4

8

12

16

20

0 100 200 300 400 500 600 700 800


Pri

ce (

cen

ts p

er

kg)

E

D

C

B

Aa

b

c

d

e

Qe

Pe

Supply

Demand



Effect of a shift inthe demand curveEffect of a shift inthe demand curve

Effect of a shift in the demand curveEffect of a shift in the demand curveP

QO

Pe1

Qe1

S

D1

g

P

QO

Pe1

Qe1

S

D1

D2

g

Effect of a shift in the demand curveEffect of a shift in the demand curve

An increase in demand

P

QO

Pe1

Qe1

S

g h

D1

D2


P

QO

Pe1

Pe2

Qe1Qe2

S

g h

i

D1

D2


Effect of a shift in the demand curveEffect of a shift in the demand curveP

QO

Pe1

Qe1

S

D1

g

P

QO

Pe1

Qe1

S

D1D2

g


A decrease in demand

P

QO

Pe1

Qe1

S

D1D2

g


Pe2

Qe2

n

m


Effect of a shift inthe supply curve

Effect of a shift inthe supply curve

Effect of a shift in the supply curveEffect of a shift in the supply curveP

QO

Pe1

Qe1

D

S1

g


QO

Pe1

Qe1

D

S1

g

An increase in supply

S2


QO

Pe1

Qe1

D

S1

g

S2

p


QO

Pe1

Qe1

D

S1

g

S2

p

Pe2

Qe2

q


QO

Pe1

Qe1

D

S1

g

P

QO

Pe1

Qe1

D

S1

S2

g

Effect of a shift in the supply curveEffect of a shift in the supply curve

A decrease in supply

P

QO

Pe1

Qe1

D

S1

S2

j g


P

QO

Pe1

Pe3

Qe3Qe1

D

S1

S2

j g

k


Demand and supply analysis. The demand curve The demand curve: The demand for potatoes (monthly)

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Transcript of Demand and supply analysis. The demand curve The demand curve: The demand for potatoes (monthly)