MARKET

DEMAND
Ma. Cassandra P. Fajardo
BSA 2-11
 MARKET
Market brings together buyers
and sellers in the product market or
source market. A market exists as
long as there are buyers and sellers
to agree on the price; hence, a
transaction takes place. The
agreed price is called the market
price or equilibrium price.
 DEMAND
It refers to the quantity of a
product or service that the
buyer is willing and able to
purchase at various possible
prices, ceterus paribus (Latin
words meaning all other
things constant).
 LAW OF DEMAND

It states that the higher the

price (P) of the good, the lesser
the quantity demanded(Qd), or
alternatively stated, the lower
the price, the higher the quantity
demanded all other things held
constant.
 DEMAND
FUNCTION
The demand function relates
price and quantity. It tells how
many units of a good will be
purchased at different prices. In
general, at higher prices, less
will be purchased.
Example:

Qd=80-4P
The demand function above shows that
the slope or coefficient of the price is -4
which means that for every peso
increase in price, quantity demanded
decreases by 4 units. The constant term
80 is the maximum quantity the market
can absorb, and that is when the product
is free or has a zero price.
 DEMAND
SCHEDULE
It is a list or table that shows
the inverse relation between
price and quantity demanded,
all other things constant.
Example:
Table 1.1
Demand Schedule
Quantit
y
The table
Point Price
Demand shows that as
ed price goes up
A 0 80 from P10 to
B 5 60 P15, quantity
C 10 40
demanded
D 15 20
decreases from
E 20 0
40 units to 20
 DEMAND CURVE

It is a locus of points that

shows the inverse relation
between price and quantity
demanded, all other things
constant.
 Example:
Figure 1.1
Price Demand Curve
25

Notice that
20
the demand
curve is
downward
15

Qd=80-4P
10
sloping which
reflects an
5 inverse
relation
between
0
0 20 40 60 Qty
80

quantity
 DETERMINANTS OF
DEMAND
1. INCOME has direct relation for normal goods but if
the product is an inferior goods, its relationship to
demand is inverse.

2. TASTES AND PREFERENCES have direct relation to

demand.

3. PRICE OF RELATED GOODS AND SERVICES for

substitute goods like rice and bread, if price of rice
increases, demand for bread also increases, so relation
is direct but inverse for complementary goods like
bread and butter. If price of bread increases, other
things constant, the demand for butter declines.
DETERMINANTS OF
DEMAND

4. BUYERS EXPECTATION ABOUT

FUTURE PRICES has direct relation
to demand.
5. NUMBER OF BUYERS has direct
relation to demand.
CHANGE IN QUANTITY
DEMANDED
A change in quantity demanded
(Qd) occurs when there is a change
in the price of the good itself.
A change in quantity demanded
therefore, is illustrated by the
movement from one point to another
along a given demand curve.
 Figure 1.2
A curve depicting a change in quantity
demanded
 CHANGE IN
DEMAND
Change in demand (D)
occurs when there is a change in
any of the other determinants of
demand such as income, number
of buyers, price expectation, etc.
 Figure 1.3
Increase in Demand
 Figure 1.4
Decrease in Demand