Demand Analysis

[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object]

Scope of Managerial Economics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Basic problems of an economy ,[object Object],[object Object],[object Object]

Fundamental Concepts Managerial Economics ,[object Object],[object Object],[object Object],[object Object],[object Object]

Demand Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Determinants of demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Law of demand ,[object Object],[object Object]

Why demand curve slopes downwards ,[object Object],[object Object],[object Object],[object Object]

Market Demand Curve ,[object Object],[object Object],[object Object],D Price Quantity

Exception to the law of demand ,[object Object],[object Object],[object Object],[object Object],[object Object]

Elasticity ,[object Object],[object Object],[object Object],[object Object]

Types of Elasticity of demand ,[object Object],[object Object],[object Object],[object Object]

Price elasticity:  p =%  Q/%  P ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Look at the Extremes ,[object Object],[object Object],[object Object],P Q P Q E p  0 D D

Relatively Elastic vs. Inelastic Demand Curves Q 1 Q 2 Q 2 ’ P 1 P 2 D’ D D’ is relatively more elastic than D P Q

Point Elasticity Formula ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Q Q 1 P 1 D

Example: Q=56-0.002*P ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Q 22 17k D

Arc Elasticity Briefly, arc elasticity is simply an average elasticity along a range of the demand curve.

Arc Elasticity Formula ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Q Q 2 P 2 P 1 Q 1 Avg. responsiveness D

Example Q=56-0.002*P ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Q 22 17k D 24 16k

Factors influence Price elasticity of demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Managerial Applications of Price elasticity of demand ,[object Object],[object Object],[object Object],[object Object]

Income Elasticity of Demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Values for Income Elasticity (   ) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Cross Price Elasticity (E XY ) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

OBJECTIVES OF SHORT TERM DEMAND FORECASTING ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

OBJECTIVES OF LONG-TERM DEMAND FORECASTING ,[object Object],[object Object],[object Object]

METHODS OF DEMAND FORECASTING ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Market Supply Curve ,[object Object],[object Object],[object Object],Price Quantity S 0

Supply Shifters ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Supply Function ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Change in Quantity Supplied 20 10 B A 5 10 A to B : Increase in quantity supplied Price Quantity S 0

Change in Supply S 1 8 7 S 0 to S 1 : Increase in supply 6 Price Quantity S 0 5

Producer Surplus ,[object Object],Price Quantity S 0 Producer Surplus Q * P *

Market Equilibrium ,[object Object],[object Object],[object Object]

Equilibrium Price and quantity Price Quantity S D 8 7

If price is too low... Price Quantity S D 5 6 12 Shortage 12 - 6 = 6 6 7

If price is too high… Price Quantity S D 9 14 Surplus 14 - 6 = 8 6 8 8 7

Demand Analysis

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Demand Analysis