Movement and Shift Along Demand and Supply Curve
Table of Contents Introduction 3 The Demand Curve 4 Movement along the demand curve: 5 Difference between movement or shifts along the demand curve 6 Shifts in the demand curve: 6 Factors that causes the demand curve to shift 8 Price of the good: 8 Price of related goods: 8 Substitutes: 8 Complements: 9 Income: 9 Individual taste and preferences: 9 Supply 9 Law of supply 9 Movement along and shifts in supply curve 10 Movement along the supply curve 11 Shifts in the supply curve 11 Factors that causes the supply curve to shift 13 Price of the product: 13 Technological changes: 13 Resource supplies and production costs: 13 Tax or subsidy: 13 Expectations of prices in future: 14 Price of other goods: 14 Number of producers in the market: 14 Conclusion 15 References 16
Introduction
The market is an amazing instrument, it enables people who have never met and who know nothing about each other to interact and do business. Supply & demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The connection between price and how much of a good or service is supplied to the market is known as the supply relationship. In this report we will see analyze the factors that causes the demand and supply curve to shift and what causes movements along both these curves. Both the supply curve and the demand curve can experience movements and shifts cause by price and other external factors that will be discussed below.
Introduction
The market is an amazing instrument, it enables people who have never met and who know nothing about each other to interact and do business. Supply & demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The connection between price and how much of a good or service is supplied to the market is known as the supply relationship. In this report we will see analyze the factors that causes the demand and supply curve to shift and what causes movements along both these curves. Both the supply curve and the demand curve can experience movements and shifts cause by price and other external factors that will be discussed below.
References: Parkin, Powell, Matthews (2008) Economics, Pearson Education Limited, 7th Edition O 'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall Krugman, Paul, and Wells, Robin. Microeconomics. Worth Publishers, New York. 2005. http://www.bized.co.uk/virtual/vla/theories http://www.netmba.com/econ/ http://faculty.winthrop.edu/stonebrakerr/book/demand_and_supply.htm http://ocw.mit.edu/courses/economics/14-01-principles-of-microeconomics-fall-2007/lecture-notes/14_01_lec02.pdf http://www.pitt.edu/~mgahagan/Definitions/SupplyandDemand.pdf