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S U PP L Y A N D D E M A N D
By
RAHUL SINHA
DEMAND
WHAT DETERMINES THE QUANTITY AN
INDIVIDUAL DEMANDS?
1. PRICE
Law of demand keeping other factors equal, law claims
that the quantity demanded of a good is decreased if its
price is increased and vice versa.
2. INCOME
substitute.
Example - hot dogs and hamburgers.
Two goods for which an increase in the price of one leads to
a decrease in the demand for the other are called
complements.
Example - Gasoline and automobiles, computers and
software.
4. TASTE
Demand is also dependent on the taste of a buyer which is
further dependent on historical and psychological factors of
a buyer.
5. EXPECTATIONS
Buyers expectations about the future may affect the
demand
for a good or service today.
If buyers expect that price of a good will fall tomorrow then
they will be unwilling to buy that good at present price.
SUPPLY
WHAT DETERMINES THE QUANTITY
AN INDIVIDUAL SUPPLIES?
1. PRICE
THE END
Q - Ketchup is a complement (as well as a condiment) for
hot dogs. If the price of hot dogs rises, what happens to
the market for ketchup? For tomatoes? For tomato juice?
For orange juice?
Ans