demand signifies the ability or the willingness to buy a particular commodity at a given point of time.

the law of demand is an economic law that states that consumers buy more of a good when its price decreases and less
when its price increases (ceteris paribus).The greater the amount to be sold, the smaller the price at which it is offered
must be in order for it to find purchasers."If the price of the good increases, the quantity demanded decreases, while if
price of the good decreases, its quantity demanded increases."

the demand curve is the graph depicting the relationship between the price of a certain commodity, and the amount of
it that consumers are willing and able to purchase at that given price. It is a graphic representation of a demand
schedule.[1] The demand curve for all consumers together follows from the demand curve of every individual consumer:
the individual demands at each price are added together

A change in quantity demanded is a change in the specific quantity of a good that buyers are willing and able to buy.
This change in quantity demanded is caused by a change in the demand price. It is illustrated by a movement along a
given demand curve..

Change in Demand: A change in demand is a change in the ENTIRE demand relation. This means changing, moving,
and shifting the entire demand curve. The entire set of prices and quantities is changing. In other words, this is a shift of
the demand curve. A change in demand is caused by a change in the five demand determinants.

FACTORS AFFECTING DEMAND:

Consumer expectations about future prices and income: If a consumer believes that the price of the good will be
higher in the future he is more likely to purchase the good now. If the consumer expects that her income will be higher in
the future the consumer may buy the good now. In other words positive expectations about future income may
encourage present consumption.[10]
Income: In most cases, the more income you have the more likely you are to buy a good. [8]
Tastes or preferences:The greater the desire to own a good the more likely you are tobuy the good. [9] There is a basic
distinction between desire and demand. Desire is a measure of the willingness to buy a good based on its intrinsic
qualities. Demand is the willingness and ability to put one's desires into effect. It is assumed that tastes and preferences
are relatively constant.
Good's own price:The basic demand relationship is between potential prices of a good and the quantities that would be
purchased at those prices.[3] Generally the relationship is negative meaning that an increase in price will induce a
decrease in the quantity demanded. This negative relationship is embodied in the downward slope of the consumer
demand curve. The assumption of a negative relationship is reasonable and intuitive. If the price of a new novel is high, a
person might decide to borrow the book from the public library rather than buy it. [4] Or if the price of a new piece of
equipment is high a firm may decide to repair existing equipment rather than replacing it.
Price of related goods: The principal related goods are complements and substitutes. A complement is a good that is
used with the primary good.[5] Examples include hotdogs and mustard, beer and pretzels, automobiles and gasoline.
(Perfect complements behave as a single good.) If the price of the complement goes up the quantity demanded of the
other good goes down.[6] Mathematically, the variable representing the price of the complementary good would have a
negative coefficient in the demand function. For example, Q d = a - P - Pg where Q is the quantity of automobiles
demanded, P is the price of automobiles and Pg is the price of gasoline. The other main category of related goods are
substitutes. Substitutes are goods that can be used in place of the primary good. The mathematical relationship between
the price of the substitute and the demand for the good in question is positive. If the price of the substitute goes down
the demand for the good in question goes down.[7]

supply is the amount of some product producers are willing and able to sell at a given price all other factors being held
constant. Usually, supply is plotted as a supply curve showing the relationship of price to the amount of product
businesses are willing to sell

FACTORS AFFECTING SUPPLY

Goods own price: The basic supply relationship is between the price of a good and the quantity supplied. Although
there is no "Law of Supply", generally, the relationship is positive or direct meaning that an increase in price will induce
and increase in the quantity supplied.[2]
Price of related goods:[2] For purposes of supply analysis related goods refer to goods from which inputs are derived to
be used in the production of the primary good. For example, Spam is made from pork shoulders and ham. Both are
derived from Pigs. Therefore pigs would be considered a related good to Spam. In this case the relationship would be
negative or inverse. If the price of pigs goes up the supply of Spam would decrease (supply curve shifts up or in) because
the cost of production would have increased. A related good may also be a good that can be produced with the firm's
existing factors of production. For example, a firm produces leather belts. The firm's managers learn that leather pouches
for smartphones are more profitable than belts. The firm might reduce its production of belts and begin production of cell
phone pouches based on this information. Finally, a change in the price of a joint product will affect supply. For example
beef products and leather are joint products. If a company runs both a beef processing operation and a tannery an
increase in the price of steaks would mean that more cattle are processed which would increase the supply of leather. [3]
Technology. Technology is the way inputs are combined to produce a final good. [4]A technological advance would cause
the average cost of production to fall which would be reflected in an outward shift of the supply curve. [2]
Expectations: Sellers expectations concerning future market condition can directly affect supply. [5] If the seller believes
that the demand for his product will sharply increase in the foreseeable future the firm owner may immediately increase
production in anticipation of future price increases. The supply curve would shift out. Note that the outward shift of the
supply curve may create the exact condition the seller anticipated, excess demand. [6]
Price of inputs: Inputs include land, labor, energy and raw materials. [7]If the price of inputs increases the supply curve
will shift in as sellers are less willing or able to sell goods at existing prices. For example, if the price of electricity
increased a seller may reduce his supply because of the increased costs of production. The seller is likely to raise the
price the seller charges for each unit of output.[6]
Government policies and regulations:Government intervention can have a significant effect on supply. [8] Government
intervention can take many forms including environmental and health regulations, hour and wage laws, taxes, electrical
and natural gas rates and zoning and land use regulations.[9]

the law of supply is the tendency of suppliers to offer more of a good at a higher price. [1] The relationship between
price and quantity supplied is usually a positive relationship. A rise in price is associated with a rise in quantity supplied.
As firms produce more output, their total costs rise proportionately faster. The ratio of the change in total costs to the
change in quantity is increasing+

The supply schedule, depicted graphically as the supply curve, represents the amount of some good that producers are
willing and able to sell at various prices, assuming ceteris paribus, that is, assuming all determinants of supply other than
the price of the good in question, such as technology and the prices of factors of production, remain the same.

A change in quantity supplied is a change in the specific quantity of a good that sellers are willing and able to sell. This
change in quantity supplied is caused by a change in the supply price. It is illustrated by a movement along a given
supply curve.3

Change in Supply: A change in supply is a change in the ENTIRE supply relation. This means changing, moving, and
shifting the entire supply curve. The entire set of prices and quantities is changing. In other words, this is a shift of the
supply curve. A change in supply is caused by a change in the five supply determinants.

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