Notes prepared by Lori-Rae

Alleyne-Franklin
Elements of Economics
Prepared by: Lori-Rae Alleyne-Franklin

These notes are to be used in conjunction with a textbook

and other resources.
• The price mechanism is the effect of the forces or actions of
demand and supply operating in the marketplace to
determine the price of commodities.

• Demand

Notes prepared by Lori-Rae

Alleyne-Franklin
• Supply
• Price
Notes prepared by Lori-Rae
Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
• Demand in economics refers to the willingness and ability of
consumers to purchase a product at a particular price over a
given time period.

Notes prepared by Lori-Rae

Alleyne-Franklin
• Demand in economics is the consumer's desire and ability to
purchase a good or service. It's the underlying force that
drives economic growth and expansion. Without demand, no
business would ever bother producing anything.

Notes prepared by Lori-Rae

Alleyne-Franklin
• When the price goes up the quantity demanded goes down.
• When the price goes down the quantity demanded goes up
• Negative relationship or inverse relationship between quantity
demanded and price.

Notes prepared by Lori-Rae

Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
• A demand schedule is a plotting of demand for goods and
services as part of economic analysis. The demand schedule
refers to a table depicting the demand in quantity terms for
goods or services at varying price levels. The plotting of a
demand schedule on a graph depicts the quantity on the X-
axis and the price on the Y-axis.

Notes prepared by Lori-Rae

Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
• The demand curve is a visual representation of how many
units of a good or service will be bought at each possible
price. It plots the relationship between quantity and price
that's been calculated on the demand schedule, which is a
table that shows exactly how many units of a good or service

Notes prepared by Lori-Rae

Alleyne-Franklin
will be purchased at various prices.
Notes prepared by Lori-Rae
Alleyne-Franklin
 Notes prepared by Lori-Rae
Alleyne-Franklin
• The demand curve slopes downward because, ceteris paribus,
lower prices imply a greater quantity demanded.
• The sum of all individual demands for a particular good or
service.

• On a graph individual demands are summed horizontally to

obtain the market demand curve.

Notes prepared by Lori-Rae

Alleyne-Franklin
• The demand curve slopes downward because, ceteris paribus,
lower prices imply a greater quantity demanded.
• These are factors that influence a change in demand:
• A change in price of other goods
• A change in taste and fashion
• Expectation of a future price change or shortage
Government policy

Notes prepared by Lori-Rae

Alleyne-Franklin
•
• A change in real income
• A change in the size and composition of the population
Notes prepared by Lori-Rae
Alleyne-Franklin
• Change in quantity demanded means movement along the demand
curve, caused by a change in the price of the product.
• Eg: Note that price is constant $50.00 per dozen and the demand for
mangoes at this price is 25 dozen. The original demand curve is DD.
• However, when
demand increases,
the curve shifts

Notes prepared by Lori-Rae

Alleyne-Franklin
to the right.
• Shown by the curve
D1D1 and more
mangoes are
demanded (30 dozen)
at the same price of $50.00.
• When demand decreases, as indicated by the curve shifting left the
new demand curve is D0D0. The new demand is 20 dozen at the same
price $50.00.
Notes prepared by Lori-Rae
Alleyne-Franklin
• Supply is a fundamental economic concept that describes the
total amount of a specific good or service that is available to
consumers. It refers to the willingness and ability of
manufacturers to supply goods and services at a particular
price during a certain period of time.

Notes prepared by Lori-Rae

Alleyne-Franklin
• Supply can relate to the amount available at a specific price or
the amount available across a range of prices if displayed on a
graph.

• This relates closely to the demand for a good or service at a

specific price; all else being equal, the supply provided by
producers will rise if the price rises because all firms look to
maximize profits.
• Supply and demand trends form the basis of the modern
economy.

• Each specific good or service will have its own supply and
demand patterns based on price, utility and personal
preference. If people demand a good and are willing to pay

Notes prepared by Lori-Rae

Alleyne-Franklin
more for it, producers will add to the supply.

• As the supply increases, the price will fall given the same level
of demand. Ideally, markets will reach a point
of equilibrium where the supply equals the demand (no
excess supply and no shortages) for a given price point; at this
point, consumer utility and producer profits are maximized.
• When the price goes up the quantity supplied goes up.
• When the price goes down the quantity supplied goes down.
• There is a direct relationship between price and quantity
supplied.

Notes prepared by Lori-Rae

Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
A supply schedule is a table that shows the quantity supplied at different
prices in the market. A supply curve shows the relationship between
quantity supplied and price on a graph. The law of supply says that a
higher price typically leads to a higher quantity supplied.

Notes prepared by Lori-Rae

Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
The supply curve is a graphic representation of the correlation between
the cost of a good or service and the quantity supplied for a given
period. In a typical illustration, the price will appear on the left vertical
axis, while the quantity supplied will appear on the horizontal axis.

Notes prepared by Lori-Rae

Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
Notes prepared by Lori-Rae
Alleyne-Franklin
• The sum of all individual supplies for all sellers of a particular
good or service.

• On a graph individual supply are summed horizontally to

obtain the market supply curve.

Notes prepared by Lori-Rae

Alleyne-Franklin
https://www.thebalance.com/what-is-demand-
definition-explanation-effect-3305708
https://slideplayer.com/slide/10569703/
https://slidetodoc.com/market-demand-analysis-

Notes prepared by Lori-Rae

Alleyne-Franklin
what-is-demand-demand-is/
https://www.slideshare.net/FaHadHassanNooR/th
e-market-of-supply-and-demand-economics
https://www.investopedia.com/terms/s/supply.as
p
https://www.slideshare.net/farhanarnab01/suppl
y-demand-how-it-affects-the-marketplace
https://forestrypedia.com/write-comprehensive-
note-on-law-of/
https://cleartax.in/g/terms/demand-schedule
https://opentextbc.ca/principlesofeconomics/cha

Notes prepared by Lori-Rae

Alleyne-Franklin
pter/3-1-demand-supply-and-equilibrium-in-
markets-for-goods-and-
services/#:~:text=A%20supply%20schedule%20is
%20a%20table%20that%20shows%20the%20quan
tity,to%20a%20higher%20quantity%20supplied.