Demand and supply

Demand

Demand

The willingness and ability of a consumer to buy certain goods or services at different price levels during a specific time period

Law of demand

If price increase demand decreases and if price decreases demand increases ceteris paribus

Demand curve

A graphic representation of a demand schedule (Always downward)

Demand schedule

A table that shows the relationship between the price of a good and the quantity demanded

Ceteris Paribus

When all other factors affecting it other than price and quantity demanded are constant (like weather)

Contraction of demand

If the price increases and the quantity demanded decreases

Extension of demand

If the price decreases and the quantity demanded increases

Individual demand

Demand of one person for a product

Market demand

The sum of all the individual demands for a product at every price

Shifts in the demand (excluding price)

Changes in a consumer's income, changes in taxes on incomes, the prices and availability of other goods and services, changes in the tastes/habits/fashion, population change, and other factors (weather regulations natural disasters)

Disposable income

The income left for a consumer to spend after paying taxes

Complement goods

Goods that are needed to use other goods like petrol and cars

Joint demand

The demand for goods are directly proportional (for complement goods)

Substitute goods

Goods that can replace other goods like coffee and tea

Normal goods

As the income increases the demand increases

Inferior goods

As the income increases the demand decreases

Supply

The willingness and the ability of the producer to produce goods or services

Quantity supplied

The quantity of goods or services producers are willing and able to produce

Supply schedule

A table that shows the relationship between the price of a good and the quantity supplied

Supply curve

A diagram showing the quantity of goods produced at a price (always upward from origin)

Law of supply

As the price increases the quantity supplied increases and vice versa ceteris paribus

Market supply

The sum of multiple firm's individual quantity supplied

Quantity extension

When the price increases the quantity supplied increases

Quantity contraction

When the price decreases the quantity supplied decreases

Shifts in the supply curve (Excluding price)

Changes in the costs of the factors of production, changes in the price and profitability of other goods and services, technological advancements, business optimism, and global factors (wars and pandemics)

Market equilibrium

When the quantity supplied is equal to the quantity demanded (E)

Market price

Whatever the consumers have demanded and the producers are able and willing to produce it and the consumer buy everything at that price