Supply and demand/Tutorials: Difference between revisions
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(Introduction to be added) | (Introduction to be added) | ||
==The supply and demand functions== | |||
===The demand function=== | |||
The converse of the premise stated in the article is that the less of a thing that a person possesses, the more he is prepared to pay to acquire a little more of it. That means that, as price is increased, a progressively larger increase is needed to produce a given reduction in demand. Thus the slope of the price/demand curve increases as price is increased and falls as price is reduced - leading to a curve that is concave when viewed from above. | |||
===The supply function=== | |||
==Graphical representations== | ==Graphical representations== | ||
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[[Image:Supply Demand.jpg|right|thumb|300px|{{#ifexist:Template:Supply Demand.jpg/credit|{{Supply Demand.jpg/credit}}<br/>|}}]] | [[Image:Supply Demand.jpg|right|thumb|300px|{{#ifexist:Template:Supply Demand.jpg/credit|{{Supply Demand.jpg/credit}}<br/>|}}]] | ||
===The basic diagram=== | ===The basic diagram=== | ||
This is the stylised representation of the law of supply and demand | This is the stylised representation of the law of supply and demand that is often used for teaching purposes. | ||
that is often used for teaching purposes | |||
following diagram. | As it stands it adds nothing to Marshall's simple statement, but it is used as an introduction to the use of such diagrams to illustrate the concepts of consumer's and supplier's surplus, and to demonstrate the impact upon them of taxes and subsidies, as in the following diagram. | ||
Revision as of 03:12, 2 May 2008
(Introduction to be added)
The supply and demand functions
The demand function
The converse of the premise stated in the article is that the less of a thing that a person possesses, the more he is prepared to pay to acquire a little more of it. That means that, as price is increased, a progressively larger increase is needed to produce a given reduction in demand. Thus the slope of the price/demand curve increases as price is increased and falls as price is reduced - leading to a curve that is concave when viewed from above.
The supply function
Graphical representations
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The basic diagram
This is the stylised representation of the law of supply and demand that is often used for teaching purposes.
As it stands it adds nothing to Marshall's simple statement, but it is used as an introduction to the use of such diagrams to illustrate the concepts of consumer's and supplier's surplus, and to demonstrate the impact upon them of taxes and subsidies, as in the following diagram.
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Consumers surplus and the effect of tax
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