demand and supply model

Individual demand

The planned quantity of a good that a consumer is willing and able to buy at different prices over a period of time, keeping other factors constant

Quantity demanded

The planned quantities of a good that a consumer is willing and able to buy at a particular price over a period of time

Want vs demand

• want is a desire for goods and services; does not need to be backed up by purchasing power

• Demand involves willingness and ability aka purchasing power

Demand vs quantity demanded

• demand curve and schedule vs numerical quantity

• Different prices vs a particular price

• Relationship between price and quantity demanded vs the planned quantity a consumer is willing and able to buy

Demand schedule

Relationship between price and quantity demanded

What is kept constant in a demand curve?

Non price factors: consumers’ income, taste and preference

Law of demand

The price of a good increases, the quantity demanded decreases, vice versa, keeping other factors constant.

Price and quantity demanded is negatively related; demand curve is downwards sloping

Reason for ceteris paribus

• non price factors: no of advertisements, consumers’ income, taste and preferences

• Want to know how price affects quantity demanded

• Therefore kept constant

Market demand

The planned quantities all indidvual consumers are willing and able to buy at different prices over a period of time, keeping other factors constant.

What does a market demand curve represent?

Relationship between price and market quantity demanded

Sum of all indidvual quantity demanded → horizontal summation

Supply

The planned q