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DEMANDAND SUPPLY
Group 4
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INTRODUCTION
The main task of the managers is to make
good decisions. Taking right decisions help in
increasing the value of organization.
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WHATISPROFIT
Economist view of profit
Accountant view of profit
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WHATISMARKET
BUYER & SELLER >>> PRICE
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WHATISDEMAND
Demand = Desire+ Ability+ Willingness
Demand has inverse relationship with price
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DEMANDSIDEOFMARKET
Demand side of market refers to consumers
and the price they are willing to pay for buyingcertain quantity
of a product during a period of
time.
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FACTORSAFFECTING DEMAND
Price
Income
Tastes/ habit /fashion
Advertisement
Price of substitutesGovernment regulation
Weather condition
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LAWOFDEMAND
According to Alfred Marshall Other things beingsequal more will
be demanded at a lower price and
diminished at a higherprice.
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WHATISSUPPLY
Quantity of goods or services which an
individual producer or a firm is willing to sell at
various prices.
Supply has direct relationship with price.
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SUPPLYSIDEOFMARKET
Market supply refers to the sum of all
individual supplies for all sellers of a particular
good or service.
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LAWOFSUPPLY
According to Alfred Marshall Other things being
equal more will be supply at a higher price than at
a lowerprice.
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FACTORSAFFECTINGSUPPLY
Price of the commodity
Change in technology
Cost of factors
Climate
Import and export
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EQUILIBRIUM
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DEMANDCURVESHIFT
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SUPPLYCURVESHIFT
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PRICEELASTICITYOFDEMAND
It defined as the ratio of percentage change in
quantity demanded to a percentage change in
price.
Types
Perfectly elastic
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Perfectly inelastic
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Relatively elastic
o
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Relatively inelastic
o
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Unit elastic
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POINTELASTICITY
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ARC ELASTICITY
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THEEFFECTOFPRICEONFIRMREVENUE
Helps the manager to increase the firms total
revenue.
Estimate whether to increase or decrease the
price.
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DETERMINANTSOFPRICEELASTICITYOF
DEMAND
Nature of product
Income
Substitutes
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TOTALREVENUE, MARGINALREVENUE&
PRICEELASTICITY
Total Revenue =Quantity Sold X Price Per Unit
Determines total revenue
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MARGINALREVENUE
ED is elastic E>1 price increases > revenue
decreases
ED is unitary E=1 price increases > revenue
increases ED is inelastic E revenue
increases
Marginal Revenue is the additional revenue
that will be generated by increasing product
sales by 1 unit.
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INCOMEELASTICITY
Price increases while income stays the same,
demand will decrease
The degree to which an increase in income will
cause an increase in demand.
Determinant of income elasticity of demand
Necessities
Luxuries
Inferior goods
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CROSS PRICE ELASTICITY
The rate of response of quantity demanded of
one good, due to a price change of another
good
ADVERTISINGELASTICITYOFDEMAND
Effect of an increase or decrease in advertising
on a market
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Group Members :Rushita UsapkarShilton PereiraSwanand VazeTanvi S
DesaiGupti KunkolkarNeha SatardekarAshwin Lawande
