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Introduction to Demand and Supply.docx

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University of Toronto Mississauga
Lee Bailey

Chapter 3DemandSupplyDemandThe total amount of any particular good or service that consumers want to purchase in some time period is called the quantity demanded of that product ie It is the amount that consumers want to purchase when faced with a particular price of the product other products their prices their incomes tastes etc It may be different from the amount that consumers actually succeed in purchasing Demand is influenced by several variables Products priceConsumers incomePrice of other products Complementary and SupplementaryTastesPopulationExpectation of the futureQuantity Demanded and PriceA products price and the quantity demanded are inversely related IE All other factors constant lower the price higher the quantity demandedWhen all other factors remain constant and only the price rises many consumers will decide to switch to alternate products Others may choose to stop buying altogether while others may choose to buy in smaller quantities Overall the effect will be that less quantity will be demanded Similarly as the price goes down the demand will rise There are two ways of showing the relationship between price and quantity demanded They areDemand SchedulesDemand CurvesDemand ScheduleA demand schedule is one way of showing the relationship between quantity demanded and the price of a product other things being equal It is a table showing quantity demanded at various prices
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