Tiêu đề Short Notes__ Theory of Demand and Supply (Unit 01).pdf ✅

2 Theory of Demand and Supply 5. Consumers' Expectations: • Expectations about future prices, income, and supply influence current demand. • Positive expectations lead to higher demand; negative expectations reduce it. • Example: Expecting increase in price of petrol tomorrow in the future may increase current demand of petrol.  Other Factors • Population size, age distribution, national income, consumer-credit facilities, government policies, and various external factors play roles in influencing demand.  Remember Your Short Trick Given By Love Kaushik Sir – Tipper A CNG  Demand Function: 1. It refers to the functional relationship between the demand for a product (the dependent variable) its determinants (the independent variables) is called demand function Dx = f (Px, Y, Py, T, etc.) Where – Dx = quantity demanded of product X Px = the price of the product X Y = disposable income of the consumer Py = the price of its related goods Pc = the price of its complementary goods T = consumer’s tastes and preferences 2. 3. Law of Demand: • Definition: States an inverse relationship between the price of a good and the quantity demanded, assuming other factors remain constant (ceteris paribus). • Alfred Marshall's Definition: "The greater the amount to be sold, the smaller must be the price." • Illustration: When the price increases, quantity demanded falls; when the price decreases, quantity demanded rises. • Factors Held Constant: Prices of related goods, consumer income, tastes, and preferences etc. 4. Demand Schedule: • Definition:A table showing quantities of a good at different prices, assuming other factors are constant. 5. Demand Curve: • Definition: A graphical representation of the demand schedule. • Slope: Negative slope (downward) indicating the inverse relationship. 6. Market Demand Schedule and Curve: • Definition: Market demand shows the total quantity demanded by all buyers at different prices. • Summation: Adding individual quantities demanded at each price to obtain market demand.

4 Theory of Demand and Supply 8. Other Significant Changes: Changes in factors like income, prices of related goods, tastes, and fashion can invalidate the inverse demand-price relationship.  Expansion of Demand & Contraction of Demand Both are the types of Movement Along Demand Curve : 1. Expansion of Demand – It is rise in demand due to fall in price. Also, known as increase in quantity demanded. Price (₹) Quantity (Units) 10 150 8 200 2. Contraction of Demand – It is fall in demand due to rise in price. Also, known as decrease in quantity demanded. Price (₹) Quantity (Units) 10 150