Karthikeyan

Demand and Supply

🔹 Meaning of Demand

• Demand is the quantity of a good or service that consumers are willing and able to buy at a given price.

• Demand depends on price and other factors.

Factors Affecting Demand

• Price of the good

• Income of consumers

• Tastes and preferences

• Prices of related goods (substitutes & complements)

• Number of buyers

🔹 Meaning of Supply

• Supply is the quantity of a good or service that producers are willing and able to sell at a given price.

• Supply mainly depends on price and cost of production.

Factors Affecting Supply

• Price of the good

• Cost of production

• Technology

• Prices of inputs

• Government policies (taxes, subsidies)

📈 Law of Demand

• When price falls, demand rises

• When price rises, demand falls(Other factors remain constant)

📉 Law of Supply

• When price rises, supply rises

• When price falls, supply falls

⚖️ Market Equilibrium

• The price at which quantity demanded = quantity supplied

• Called the equilibrium price

• No excess demand or excess supply