CAIIB ABM Unit 2 Supply And Demand

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1. Economics is a powerful tool for explaining reasons behind changes in the theory of Demand and Supply.

2. Economics states how consumer preferences determine consumer demand for ommodities, while business costs determie the supply of commodities.

3. Price of commodity increases, supply decreases & vice versa. This relationship that exists between price and quantity called Demand Schedule /or Demand Cirve

4. Demand curve: Graphical representation of Demand Schedule

5. Law of Downward – Sloping Demand: When the price of a commodity is raised buyers tend to buy to less commodity. Similarly when price is lowered, quantity increased .

6. Market Demand: which represents the sum total of all indidvial demands

7. Forces behind Demand Curve:
(i) Average Income
(ii) Size of the Market
(iii) Price and Avaialability of related Goods influence the demand of a commodity
(iv) Tastes or Preferences
(v) Special Influences will affect demand of a particular product

8. Supply Schedule: Relates the quantity supplied of a good to its market price. Also called Supply Curve.

9. Supply Curve: Graphical representation of quantity supplied of a good to its market price.

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