Individual And Market Demand And Supply
Economics notes
Individual And Market Demand And Supply
➡️ Demand and supply are the two most important forces that determine the price and quantity of a good or service in a market.
➡️ Demand is the quantity of a good or service that consumers are willing and able to purchase at a given price.
➡️ Supply is the quantity of a good or service that producers are willing and able to produce at a given price.
➡️ Equilibrium price and quantity are the price and quantity at which the quantity demanded is equal to the quantity supplied.
➡️ Changes in demand and supply can cause the equilibrium price and quantity to change, resulting in a new equilibrium.
What is the difference between individual demand and market demand?
Individual demand refers to the quantity of a good or service that a single consumer is willing and able to purchase at a given price. Market demand, on the other hand, is the sum of all individual demands for a particular good or service within a given market or geographic area.
How do changes in supply and demand affect market equilibrium?
Market equilibrium occurs when the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers. If there is an increase in demand, the equilibrium price and quantity will both rise. Conversely, if there is a decrease in demand, the equilibrium price and quantity will both fall. Similarly, if there is an increase in supply, the equilibrium price will fall and the equilibrium quantity will rise, while a decrease in supply will cause the equilibrium price to rise and the equilibrium quantity to fall.
What factors can shift the supply and demand curves?
Several factors can cause shifts in the supply and demand curves, including changes in consumer preferences, changes in income levels, changes in the prices of related goods or services, changes in technology or production methods, and changes in government policies or regulations. For example, if a new technology is developed that makes it cheaper to produce a certain good, the supply curve will shift to the right, causing the equilibrium price to fall and the equilibrium quantity to rise. Similarly, if the government imposes a tax on a particular good, the supply curve will shift to the left, causing the equilibrium price to rise and the equilibrium quantity to fall.