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MARKET ADJUSTMENTS PowerPoint PPT Presentation


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MARKET ADJUSTMENTS. Changes To Demand And Supply. MARKET ADJUSTMENTS. The price of a product remains at the equilibrium point until something changes the demand and/or supply in a market.

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MARKET ADJUSTMENTS

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Market adjustments l.jpg

MARKET ADJUSTMENTS

Changes To Demand And Supply


Market adjustments2 l.jpg

MARKET ADJUSTMENTS

  • The price of a product remains at the equilibrium point until something changes the demand and/or supply in a market.

  • Changes in market demand or market supply are not unusual, in fact, most markets have demands and supplies that drift around a bit.


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MARKET ADJUSTMENTS

  • Mostly, these change are ignored. However, large changes in demand or supply cannot be ignore.

  • It’s possible therefore, to examine the impact on equilibrium price and quantity of an increase or decrease in demand, and an increase or decrease in supply.


An increase in demand as a table l.jpg

AN INCREASE IN DEMAND AS A TABLE


An increase in demand as a graph l.jpg

AN INCREASE IN DEMAND AS A GRAPH


An increase in demand in equation form l.jpg

AN INCREASE IN DEMAND IN EQUATION FORM

Qd = 800 - 100(Price) and Qs = 100(Price)Set: Qd = Qs

Substitute: 800 - 100(Price) = 100(Price)

Simplify: 800 = 200(Price)

Solve: $4 = Price

Qd = 800 - 100(Price)Qs = 100(Price)

Qd = 800 - 100(4)Qs = 100(4)

Qd = 400 Qs = 400


Market adjustment to an increase in demand l.jpg

MARKET ADJUSTMENT TO AN INCREASE IN DEMAND

  • When demand increases a larger quantity is demanded at every price.

  • The result is an increase in price to $4.00 and an increase in quantity to 400.


A decrease in demand as a table l.jpg

A DECREASE IN DEMAND AS A TABLE


A decrease in demand as a graph l.jpg

A DECREASE IN DEMAND AS A GRAPH


A decrease in demand in equation form l.jpg

A DECREASE IN DEMAND IN EQUATION FORM

Qd = 400 - 100(Price) and Qs = 100(Price)Set: Qd = Qs

Substitute: 400 - 100(Price) = 100(Price)

Simplify: 400 = 200(Price)

Solve: $2 = Price

Qd = 400 - 100(Price)Qs = 100(Price)

Qd = 400 - 100(2)Qs = 100(2)

Qd = 200 Qs = 200


Market adjustment to a decrease in demand l.jpg

MARKET ADJUSTMENT TO A DECREASE IN DEMAND

  • When demand decreases a smaller quantity is demanded at every price.

  • The result is an decrease in price to $2.00 and an decrease in quantity to 200.


An increase in supply as a table l.jpg

AN INCREASE IN SUPPLY AS A TABLE


An increase in supply as a graph l.jpg

AN INCREASE IN SUPPLY AS A GRAPH


An increase in supply in equation form l.jpg

AN INCREASE IN SUPPLY IN EQUATION FORM

Qd = 600 - 100(Price) and

Qs = 100(Price) +200

Set: Qd = Qs

Substitute: 600-100(Price) = 100(Price)+200

Simplify: 400 = 200(Price)

Solve: $2 = Price

Qd = 600 - 100(Price) Qs = 100(Price)+200

Qd = 600 - 100(2) Qs = 100(2) + 200

Qd = 400 Qs = 400


Market adjustment to an increase in supply l.jpg

MARKET ADJUSTMENT TO AN INCREASE IN SUPPLY

  • When supply increases a larger quantity is supplied at every price.

  • The result is a decrease in price to $2.00 and an increase in quantity to 400.


A decrease in supply as a table l.jpg

A DECREASE IN SUPPLY AS A TABLE


A decrease in supply as a graph l.jpg

A DECREASE IN SUPPLY AS A GRAPH


A decrease in supply in equation form l.jpg

A DECREASE IN SUPPLY IN EQUATION FORM

Qd = 600 - 100(Price) and

Qs = 100(Price) - 200

Set: Qd = Qs

Substitute: 600-100(Price) = 100(Price)-200

Simplify: 800 = 200(Price)

Solve: $4 = Price

Qd = 600 - 100(Price) Qs = 100(Price)-200

Qd = 600 - 100(4) Qs = 100(4) - 200

Qd = 200 Qs = 200


Market adjustment to a decrease in supply l.jpg

MARKET ADJUSTMENT TO A DECREASE IN SUPPLY

  • When supply decreases a smaller quantity is supplied at every price.

  • The result is an increase in price to $4.00 and a decrease in quantity to 200.


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