Saturday, July 28, 2018

A gist on Supply and Demand's market force.


  • Each of the buyers and sellers in a competitive market is little or not influenced on the market price.
  • To analyze competitive markets, economists use the model of demand and supply.
  • Determinants of demand include buyer's taste, income, expectation, price of substitute and complement.
  • Supply totally depends on input prices, technology and expectations.
  • In a demand and supply graph if both the curves intersect, it represents the market equilibrium.
  • At the point of equilibrium, quantity demanded equals quantity supplied. 
  • When the market price is above equilibrium, price falls.
  • When the market price is below equilibrium, price rises.
  • Three things how we need to analyze the supply demand diagram during an event on a market:
  1.  See whether due to the event, which of the curve is shifted.
  2. See the direction of the shift
  3. Compare the new equilibrium to the initial one. 

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