Supply Chain Collaboration and Responsiveness: A - IDE-JETRO
Demand, Supply & MarketsElasticity of Supply Elastic Supply The responsiveness of producers to price...
Transcript of Demand, Supply & MarketsElasticity of Supply Elastic Supply The responsiveness of producers to price...
Demand, Supply & Markets
What is a Market?Market - Any network that brings buyers and sellers into contact with one another so they
can exchange goods and services.
Are Markets growing?
Through markets our economy answers the 3 major questions.
SupplyPhysical and Psychological wants
Quantities of a good or service that sellers are willing and able to sell at minimum
various prices in a particular period of time.
As prices rise, suppliers are willing and able to supply more of something.
Sellers desire to maximize profits
Supply Curve Direct relationship b/t Quantity supplied and Price
Prices means to ration the good
Ceteris Paribus
Graphing Supply Curves / Upward Sloping
When demand goes up sellers increase the price
Price-quantity relationship (ex) as prices increase, more farmers see the chance for
greater profits and are willing to switch over to its melon production.
Ceteris Paribus, as the price of melons
fall, more melons will be demanded and
fewer supplied. Conversely, as the
price rises, more will be supplied and
fewer demanded.
Shifts in supply - Decrease
A decrease in supply occurs when the curve
shifts to the left.
Prices cause a movement along the supply curve
while shifts occur because of prices of
other goods, number of sellers, prices of relevant
inputs, technology, expectations
(production costs).
Shifts in supply - Increase
An increase in supply occurs when the curve
shifts to the right.
Prices cause a movement along the supply curve
while shifts occur because of prices of
other goods, number of sellers, prices of relevant
inputs, technology, expectations
(production costs).
At some price, the quantity supplied and
the quantity demanded will be equal =
Equilibrium or Market clearing price.
Supply = Demand at the price of 60
cents. At this price, 20 melons are
supplied and twenty melons are demanded.
Higher Price - At 70 cents per
melon, 15 melons are demanded and 25
supplied. There is a surplus of melons
What role will competition play in
this example?
Competition among melon suppliers pushes the price
down
Lower Price - At 40 cents per
melon, 10 melons are supplies and 30
demanded. There is a shortage of melons
What is the shortage of melons?
20 melons
Competitions role?Buyers competition forces equilibrium
Changes in the shift in Demand applies also to supply
Elasticity of SupplyElastic Supply
The responsiveness of producers to price changes in their products Factors:
1) time is one of the most important
2) Longer shelf life
Highly responsive to change in price - Producing however
much you want.
Inelastic SupplyUnresponsive to change in price - Being unable to produce more.
Inelastic Supply Elastic Supply