Dhrubajyoti Baishya

Demand Changes in Demand 😧 Change in Demand – What Determines Demand ? Factors That Impact Demands - P • Tastes • Income S upply • Number of Consumers D2 • Prices of Substitutes • Prices of Complements D1 Demand Q What happens when demand decreases..? 6  Decrease in income 5  Less consumers 4  Prices of substitutes fail 3  Availability of complements decrease 2  Price of complements rise 1 0 10 20 30 40 >Decrease in Demand< Price S upply P0 P Demand Quantity Q Q0 Market Forces… Decrease in Demand • Quantity supplied is greater than quantity demanded Price • Inventory levels rise • Suppliers have to much (surplus) products • Suppliers are forced to lower price Supply P0 P 7 5 Demand Surplus Surplus 10 < 15 : Therefore, Surplus = 5 QD < QS Quantity What Happens When Demand Increases.... Price S upply  Increase in income  Price of substitutes rise P  Price of complements decrease P0  Availability of complements increase  More consumers Demand Quantity Q0 Q Market Forces… Increase in Demand • Quantity supplied is less than quantity demanded • Inventory levels fail • Suppliers have to little (surplus) products • Suppliers are forced to raise price