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Slide 1

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The Market System
Demand, Supply and Price
Determination…read more

Slide 2

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The Market System
Market consists of:
Consumers - create a demand for a product
the amount consumers desire to purchase at various
Not what they will buy, but what they would like to
Effective demand ­ must be willing AND able to
pay…read more

Slide 3

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Individual and Market Demand
Market demand ­ consists of the sum of all
individual demand schedules
in the market
Represented by a demand curve
At higher prices, consumers generally willing to
purchase less than at lower prices
Demand curve ­ negative slope, downward
sloping from left to right…read more

Slide 4

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The Demand Curve
Price (£) The demand curve slopes
downwards from left to
right (a negative slope)
indicating an inverse
relationship between price
and the quantity
£10 demanded. Quantity
demanded will be higher
at lower prices than at
higher prices. As price
falls, quantity demanded
rises. As price rises,
quantity demanded falls.
100 150
Quantity Demanded (000s)…read more

Slide 5

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The Demand Curve 2
The level of demand ­
determines where on the graph it sits
Low demand ­
nearer the origin
High demand ­
further from the origin (assuming same scale)
Dependent on a variety of factors
Demand curve moves in response
to changing factors…read more

Slide 6

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The Demand Curve 3
Factors influencing demand:
Prices of other goods ­ substitutes and
Incomes ­ the level and distribution
of income
Tastes and fashions
The level and structure of the population
Expectations of consumers…read more

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Slide 9

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Slide 10

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