Is it possible to say that demand equals supply. The law of supply and demand, with examples of elasticity or exceptions given. Elasticity in demand and direct examples of its manifestation

The state of the market is determined by the ratio of supply and demand.

Supply and demand are interdependent elements of the market mechanism, where demand determined by the solvent needs of buyers (consumers), and sentence- a set of goods offered by sellers (manufacturers); the ratio between them develops into an inversely proportional relationship, determining the corresponding changes in the level of prices for goods.

If a demand- this is the quantity of products that the buyer wants and has the opportunity to buy (that is, the solvent need), then sentence- this is the amount of goods that sellers are willing to offer at a specific time in a specific place.

Demand is a request by an actual or potential buyer, consumer to purchase a product using the funds available to him, which are intended for this purchase.

Law of demand- quantity demanded decreases as the price of the good increases. That is, an increase in price causes a decrease in the quantity demanded, while a decrease in price causes an increase in the quantity demanded.

1. First way- with the help of a table. We will make a table of the dependence of the quantity demanded on the price, using conditional figures taken at random.

Table. Law of demand

The table shows that at the highest price (10 rubles), the goods are not bought at all, and as the price decreases, the quantity demanded increases; the law of demand is thus observed.

Rice. Law of demand

Second way- graphic. Let's put the above figures on the chart, postponing the amount of demand on the horizontal axis, and the price - on the vertical one (Fig. a). We see that the resulting demand line (D) has a negative slope, i.e. the price and quantity demanded change in different directions: when the price falls, demand rises, and vice versa. This again testifies to the observance of the law of demand. The linear function of demand presented in fig. a is a special case. Often the demand curve has the form of a curve, as can be seen in Fig. b, which does not invalidate the law of demand.

In economics, A demand curve is a graph illustrating the relationship between the price of a particular good or service and the number of consumers willing to buy it at that price.

Excess demand or shortage The accompanying prices below the equilibrium price indicate that buyers need to pay a higher price in order not to be left without a product. The rising price will be:

1) encourage firms to redistribute resources in favor of the production of this product;

2) push some consumers out of the market.

Sentence- the ability and desire of the seller (manufacturer) to offer their goods for sale on the market at certain prices.

The law of supply: the higher the price of a given commodity, the greater the quantity of it producers are willing to sell during a given time and other conditions unchanged.

Factors affecting the offer:

1. Availability of substitute products.

2. Availability of complementary goods (complementary).

3. The level of technology.

4. Volume and availability of resources.

5. Taxes and subsidies.

6. Natural conditions

7. Expectations (inflationary, socio-political)

8. Market size

This law can be expressed in different ways:

First way- with the help of a table. Let's make a table of the dependence of the supply on the price, using randomly taken conditional numbers.

Table. Law of supply

The table shows that at the lowest price (2 rubles), no one wants to sell anything, and as the price increases, the supply increases; the law of supply is thus observed.

Rice. Law of supply

Second way- graphic. Let's put the given figures on the graph, postponing the supply value on the horizontal axis, and the price - on the vertical one (Fig. a). We see that the resulting supply line (S) has a positive slope, i.e. price and quantity supplied change in the same direction: when the price rises, the quantity supplied also rises, and vice versa. This again indicates that the law of supply is being observed. The linear supply function shown in Fig. a is a special case. Often the supply schedule has the form of a curve, as can be seen in Fig. b, which does not change the law of supply.

The supply curve is a graph illustrating the relationship between market prices and the quantity of goods that producers are willing to supply..

Oversupply, or surplus production, arising at prices above the equilibrium price, will induce competing sellers to lower prices in order to get rid of excess stocks. Falling prices will:

1) suggest to firms that it is necessary to reduce the resources spent on the production of this product;

2) will attract additional buyers to the market.

Supply and demand are closely related and continuously interacting categories and serve as a link between production and consumption. The magnitude of demand, both individual and aggregate, is influenced by price and non-price factors, which must be clearly monitored on an ongoing basis by special departments.

The result of the interaction of supply and demand is the market price, which is also called the equilibrium price. It characterizes the state of the market, in which the magnitude of demand is equal to supply.

Elasticity of demand

Price elasticity of demand- a category that characterizes the reaction of consumer demand to a change in the price of a product, i.e., the behavior of buyers when the price changes in one direction or another. If a decrease in price leads to a significant increase in demand, then this demand is considered elastic. If significant change in price leads to only a small change in the quantity demanded, then there is a relatively inelastic or simply inelastic demand.

The degree of sensitivity of consumers to price changes is measured using the coefficient of price elasticity of demand, which is the ratio of the percentage change in the quantity of the requested product to the percentage change in price that caused this change in demand.

There are also extreme cases:

Perfectly elastic demand: there can be only one price at which the goods will be purchased by buyers; the price elasticity of demand tends to infinity. Any change in price leads either to a complete rejection of the purchase of goods (if the price rises), or to an unlimited increase in demand (if the price decreases);

Absolutely inelastic demand: no matter how the price of a product changes, in this case the demand for it will be constant (the same); the price elasticity coefficient is equal to zero.

It is very difficult to single out specific factors that affect the price elasticity of demand, but it is possible to note certain characteristic features inherent in the elasticity of demand for most goods:

1. The more substitutes for a given product, the higher the degree of price elasticity of demand for it.

2. The greater the place taken by the cost of goods in the budget of the consumer, the higher the elasticity of his demand.

3. Demand for basic necessities (bread, milk, salt, medical services etc.) is characterized by low elasticity, while the demand for luxury goods is elastic.

4. In short term the elasticity of demand for a product is lower than in longer periods, since in the long run entrepreneurs can produce a wide range of substitute products, and consumers can find other products that replace this one.

Analysis of the situation of market equilibrium, excess and

The interaction of supply and demand.

The main factor in changing supply and demand is the price. Sellers and buyers, focusing on prices, develop plans for their behavior, and in accordance with them make their decisions about buying and selling goods. However, when they meet in the market, it turns out that, as a result of coordination, supply and demand can change their price and bring it to a compromise agreement, i.e. to the market price.

Market price – is the price of a compromise, an agreement between the seller and the buyer, the price, at which the goods are actually sold and bought. The market price is also called at the cost of balance because it is at that level of equilibrium when the seller is still willing to sell, and the buyer is already willing to buy the goods.

In the process of interaction between sellers and buyers, it is possible three options for market equilibrium:

1. The supply of goods exceeds the demand of buyers. This situation may be the result of:

excess production of goods;

Not of high quality

· exorbitantly high prices for them, faced with low purchasing power of buyers. The resulting discrepancy, as a rule, leads to crisis situations. The solution to this problem can be: lowering prices, reducing the volume of production, improving the quality of products, improving distribution relations and regulating income.

2. Demand exceeds supply . Unsatisfied consumer demand is the result of exorbitant price increases. People are looking for an application for their money. As a result, there is intense competition between buyers for the right to purchase the missing goods. Commodity prices are rising. In this fight those buyers who have higher incomes win.

3. The balance of supply and demand . It characterizes the general and particular correspondence between the volume and structure of demand for goods on the one hand, and the volume and structure of supply on the other, as a result of which they are balanced.

The resulting equilibrium indicates that the market offers as many goods and in such an assortment that fully satisfy demand and are available to the buyer at the offered prices. But, as a rule, such a correspondence is almost rare. Producers usually differentiate goods by offering them for sale at different prices, based on different levels of buyers' solvency, so for the same product on the sales market, as many equilibrium points between supply and demand are formed as there are matches between them.

To establish a market price, we combine the previously considered demand schedules (Fig. 6.1.1.) and supply (Fig. 6.2.1.). Both of these graphs depict in each case the quantity of goods depending on the price level (Fig. 6.3.1.).

The level of intersection of the supply and demand curves (point A) determines the level of the market price. Point A is called the equilibrium point, and the price (F) is called the equilibrium. This is really a balancing price, because any other point of intersection of the curves means a disproportion between effective demand and the corresponding commodity supply.

If the market the price will fall below the equilibrium , decreases to the level (K), then the number of buyers will increase at the expense of those persons to whom the price at the level of point F was inaccessible. Therefore, demand will also increase (up to OE). But a decrease in the market price (from F to K) will reduce the number of sellers at the expense of those for whom this price is unacceptable, since it does not even reimburse costs.

6.3.1. Equilibrium price.

As a result increased demand (OE) will be opposed by a much smaller supply of the good (OL). Arises trade deficit (in Fig. 4 it is equal to the segment LE).

When driven by demand, the market price will rise equilibrium and rise to the level (R), then the number of sellers will increase at the expense of those who have large expenses. Consequently, supply will increase(DE will be added to OD). But now the increase in the market price (from F to R ) will reduce the number of buyers (from OD to OL) at the expense of those to whom this price becomes inaccessible. As a result, the increased supply (OE) will be opposed by a much smaller solvent number of buyers (OL). Overproduction arises , surplus of goods (in Fig. 6.3.1 it is equal to the segment LE).

In this way, equilibrium price is the price at which demand equals supply. If the price rises above the equilibrium point, it will stimulate an increase in production, which will lead to an increase in the supply of goods and the price of goods will begin to decline, approaching the equilibrium point. Lowering the price, in turn, by increasing consumer demand, will help to expand production and return to the equilibrium point.

Thus, on the market goes competition between the seller and the buyer for a more favorable price for each of them. As a result of this struggle, the price is balanced, i.e. is fixed at a point where the interests of the buyer and the seller coincide.

It should be noted that the movement of the equilibrium price up or down, i.e. upward or downward, directly affects the well-being of various groups of the population. Therefore, sometimes the state tries administrative methods intervene in the process market pricing, which most often comes down to setting the price at a level below the market equilibrium. As practice shows, through state intervention in the pricing mechanism, it has not yet been possible to solve a single problem, both in economic and in social sphere. State control over prices leads to artificial regulation of supply and demand. Setting prices for goods below the equilibrium price creates a market environment that is unfavorable for the manufacturer: the production of goods is unprofitable or unprofitable. There is a shortage of goods, and, as a result, goods go into the shadow economy, where prices for them are not only higher than the state ones, but also higher than the equilibrium price. Moreover, the circulation of such goods does not allow them to be taxed, and this entails a reduction in state revenues. Under the conditions of such management, the low-income strata of society are not only not protected by the state, but are even more drawn into the quagmire of economic turmoil: shadow goods become inaccessible to them, and the shortage of essential goods in general gives rise to an ugly system of distribution of material wealth with the help of cards, coupons, coupons, etc. .P. The deficit of budgetary funds due to the concealment of income by shadow structures further increases the social insecurity of those whom the state should protect.

The economy today is quite closely connected with trade, the concept of the market, the existing types of the market, how exactly their features affect the development, what opportunities are provided to the participants is important for it. The extent to which the market and the market mechanism is regulated by the state also matters. How exactly does everything happen? To what extent? What are the protection mechanisms, if any?

Recall that hallmark market economy is non-interference on the part of the government, power structures in general. This is declared in many modern countries, but what is it really?

In short, the beginning of the formation of the all-Russian market is precisely associated with a departure from the dictates of the state and movement towards greater freedom. But there has been no historically smooth growth as such. There was a rather sharp and painful for many breakthrough, which led to destabilization, to the disappearance of guarantees. In the early 90s, the market for factors of production (land, labor and capital) began to emerge again, but control was often very conditional. As a result, the all-Russian market at the first stage was characterized by extremes, randomness, and the penetration of criminal elements into power structures. All this gave rise to a sense of danger, increased risk for ordinary participants.

At the same time, the essence of a market with a free economy was not familiar to most. Not everyone understood exactly how demand and supply are formed in practice in the land market, for example, what options and alternatives exist. This state of affairs, without quality treatment of the problem, often breeds a regression to a desire for more control.

As a result, the modern all-Russian market often suffers from interference from the government, from the adoption of ill-conceived bills, etc. At the same time, it cannot be denied that the functions of the state imply, among other things, also the stabilization of the situation, the study of what can be the cause of inflation. That is, it was impossible not to interfere at all. Another thing is how exactly the situation should be changed, how the functions of the state as a whole and in the localities are implemented.

For Russia, many types of markets have been and remain an unexplored concept. Something has been studied in theory, for example, by representatives of certain professions in universities, but not mastered in practice. That is why when there are attempts to introduce new technologies, to change the situation as a whole, slippage, errors, problems begin that directly affect the emerging situation.

It is impossible to ignore the types of markets, the law of supply and demand, price and non-price factors of their formation, the relationship between the concepts described above. Even if, for example, demand and supply in the capital market in Russia are very subject to change due to local specifics, you still need to understand how things should work in order to find out why this does not happen.

Demand. Law of demand

Demand (D- from English. demand) is the intention of consumers, secured by means of payment, to purchase this product.

Demand is characterized by its size. Under quantity demanded (Qd) the quantity of a commodity that a buyer is willing and able to purchase at a given price in a given period of time.

The presence of a demand for a product means the buyer's consent to pay a specified price for it.

Ask price is the maximum price a consumer is willing to pay for a given good.

Distinguish between individual and aggregate demand. Individual demand is the demand in a given market by a specific buyer for a specific product. Aggregate demand is the total demand for goods and services in a country.

The magnitude of demand is influenced by both price and non-price factors, which can be grouped as follows:

• the price of the product itself X (Px);
• prices for substitute goods (pi);
• consumers' money income (Y);
• consumer tastes and preferences (Z);
• consumer expectations (E);
• number of consumers (N).

Then the demand function, which characterizes its dependence on these factors, will look like this:

The main factor determining demand is price. A high price of a good limits the quantity demanded for that good, and a decrease in price leads to an increase in the quantity demanded for it. From the foregoing, it follows that the quantity demanded and the price are inversely related.

Thus, there is a relationship between the price and the quantity of the purchased goods, which is reflected in the law of demand: all other things being equal (other factors affecting demand are unchanged), the quantity of goods for which demand is presented increases when the price of this goods falls, and vice versa.

Mathematically, the law of demand has the following form:

where Qd- the amount of demand for a product; / - factors influencing demand; R- the price of this product.

A change in the quantity demanded of a particular product caused by an increase in its price can be explained by the following reasons:

1. substitution effect. If the price of a product increases, then consumers try to replace it with a similar product (for example, if the price of beef and pork rises, then the demand for poultry meat and fish increases). The substitution effect is a change in the structure of demand, which is caused by a decrease in purchases of a commodity that has risen in price and its replacement with other goods with unchanged prices, since they are now becoming relatively cheaper, and vice versa.

2. income effect, which is expressed as follows: when the price rises, buyers become, as it were, a little poorer than they were before, and vice versa. For example, if the price of gasoline doubles, then we will have less real income as a result and, naturally, we will reduce the consumption of gasoline and other goods. The income effect is a change in the structure of consumer demand caused by a change in income from price changes.

In some cases, certain deviations from the rigid dependence formulated by the law of demand are possible: an increase in price may be accompanied by an increase in the quantity demanded, and its decrease may lead to a decrease in the quantity of demand, while maintaining a stable demand for expensive goods.

These deviations from the law of demand do not contradict it: an increase in prices can increase the demand for goods if buyers expect their further increase; lower prices can reduce demand if they are expected to fall even more in the future; acquisition is stable expensive goods associated with the desire of consumers to profitably invest their savings.

Demand can be represented as a table showing the quantity of a good that consumers are willing and able to buy over a given period. This dependency is called demand scale.

Example. Suppose we have a demand scale that reflects the state of affairs in the potato market (Table 3.1).

Table 3.1. demand for potatoes

At each market price, consumers will want to buy a certain amount of potatoes. When the price of it decreases, the quantity demanded will increase, and vice versa.

Based on these data, one can build demand curve.

Axis X set aside the demand (Q) along the axis Y- appropriate price (R). The graph contains several variants of the demand for potatoes, depending on its price.

Connecting these points, we get the demand curve (D) having a negative slope, which indicates an inversely proportional relationship between price and quantity demanded.

Thus, the demand curve shows that, with other factors influencing demand unchanged, a decrease in price leads to an increase in the quantity demanded, and vice versa, illustrating the law of demand.

Rice. 3.1. Demand curve.

The law of demand reveals another feature - diminishing marginal utility since the decrease in the volume of purchases of a product occurs not only due to an increase in prices, but also as a result of the saturation of the needs of buyers, since each additional unit of the product of the same name has an ever smaller useful consumer effect.

Sentence. Law of supply

The offer characterizes the willingness of the seller to sell a certain amount of goods.

Distinguish concepts: the offer and the size of the offer.

Offer (S- sapply) is the willingness of producers (sellers) to supply the market with a certain amount of goods or services at a given price.

Offer amount- this is maximum amount goods and services that producers (sellers) are able and willing to sell at a certain price, in a certain place and at a certain time.

The value of the proposal should always be determined for a specific period of time (day, month, year, etc.).

Similar to demand, supply is influenced by a variety of both price and non-price factors, among which are the following:

• the price of the product itself X(Px);
• resource prices (Pr), used in the production of goods x;
• technology level (L);
• firm goals (BUT);
• amounts of taxes and subsidies (T);
• prices for related products (Pi);
• producers' expectations (E);
• number of manufacturers of goods (N).

Then the offer function, built taking into account these factors, will have the following form:

The most important factor, affecting the amount of supply, is the price of this product. The income of sellers and producers depends on the level of market prices, thus, the higher the price of a given product, the greater the supply, and vice versa.

Offer price- this is minimum price at which sellers agree to supply the product to the market.

Assuming that all factors except the first remain unchanged:

we get a simplified sentence function:

where Q- the value of the supply of goods; R- the price of this product.

The relationship between supply and price is expressed in the law of supply, the essence of which is that the quantity supplied, other things being equal, changes in direct proportion to the change in price.

The direct reaction of supply to price is explained by the fact that production responds quickly enough to any changes occurring in the market: when prices rise, producers use reserve capacities or introduce new ones, which leads to an increase in supply. In addition, the upward trend in prices attracts other producers to the industry, which further increases production and supply.

It should be noted that in short term an increase in supply does not always follow immediately after an increase in price. Everything depends on the available production reserves (availability and workload of equipment, labor, etc.), since the expansion of capacities and the outflow of capital from other industries usually cannot be carried out in a short time. But in long term An increase in supply almost always follows an increase in price.

The graphical relationship between price and quantity supplied is called the supply curve S.

The supply scale and the supply curve of a good show the relationship (ceteris paribus) between the market price and the amount of this good that producers want to produce and sell.

Example. Suppose we know how many tons of potatoes can be offered by sellers in the market in a week at various prices.

Table 3.2. Potato offer

This table shows how many items will be offered at the minimum and maximum price.

So, at a price of 5 rubles. for 1 kg of potatoes, the minimum amount will be sold. At such a low price, sellers will probably trade in another commodity that is more profitable than potatoes. As the price increases, the supply of potatoes will also increase.

According to the table, a supply curve is constructed S, which shows how much of a good producers would sell at different price levels R(Fig. 3.2).

Rice. 3.2. supply curve.

Changes in demand

A change in demand for a product occurs not only as a result of changes in prices for it, but also under the influence of other, so-called "non-price" factors. Let's take a closer look at these factors.

Production costs are primarily determined prices for economic resources: raw materials, materials, means of production, labor force - and technical progress. It is clear that rising resource prices have a large impact on production costs and output levels. For example, when in the 1970s. oil prices have risen sharply, this has led to higher energy prices for producers, increasing their production costs and lowering their supply.

2. Production technology. This concept encompasses everything from genuine technical discoveries and the best application of existing technologies to the usual reorganization of the workflow. Improving technology allows you to produce more products with fewer resources. Technical progress also allows you to reduce the amount of resources required for the same amount of output. For example, today manufacturers spend much less time on the production of one car than 10 years ago. Advances in technology allow car manufacturers to profit from producing more cars for the same price.

3. taxes and subsidies. The effect of taxes and subsidies manifests itself in different directions: an increase in taxes leads to an increase in production costs, increasing the price of production and reducing its supply. Tax cuts have the opposite effect. Subsidies and subsidies make it possible to reduce production costs at the expense of the state, thereby contributing to the growth of supply.

4. Prices for related products. The offer on the market largely depends on the availability of interchangeable and complementary goods on the market at affordable prices. For example, the use of artificial, cheaper compared to natural, raw materials allows you to reduce production costs, thereby increasing the supply of goods.

5. Producer expectations. Expectations of changes in the price of a product in the future can also influence the manufacturer's willingness to bring the product to market. For example, if a manufacturer expects the price of his product to rise, he may start increasing production capacity already today in the hope of subsequent profit and hold the product until the price rises. Information about the expected reduction in prices may lead to an increase in supply at the moment and a reduction in supply in the future.

6. The number of producers. An increase in the number of producers of a given good will lead to an increase in supply, and vice versa.

7. special factors. For example, for certain types of products (skis, roller skates, products Agriculture etc.) the weather has a great influence.

1. Demand is the intention of consumers, secured by means of payment, to purchase a given product. Demand is the quantity of a good that a buyer is willing and able to purchase at a given price in a given period of time. According to the law of demand, a decrease in price leads to an increase in quantity demanded, and vice versa.

2. Supply is the willingness of producers (sellers) to supply the market with a certain amount of goods or services at a given price. Supply is the maximum quantity of goods and services that producers (sellers) are willing to sell at a given price in a given period of time. According to the law of supply, an increase in price leads to an increase in the quantity supplied, and vice versa.

3. Changes in demand are caused by both price factors - in this case, there is a change in the magnitude of demand, which is expressed by movement along the points of the demand curve (along the demand line), and non-price factors, which will lead to a change in the demand function itself. On a graph, this will be expressed as a shift in the demand curve to the right if demand is rising and to the left if demand is falling.

4. A change in the price of a given commodity affects the change in the supply of this commodity. Graphically, this can be expressed by moving along the supply line. Non-price factors affect the change in the entire supply function, this can be visualized as a shift of the supply curve to the right - with an increase in supply, and to the left - with its decrease.

2) Basic concepts
Law of supply and demand- objective economic law , establishing the dependence of volumes demand and supply of goods on the market from their prices . Other things being equal, than the price of product lower, the greater the effective demand for it (willingness to buy) and the smaller the supply (willingness to sell). The price is usually set at balance point between supply and demand. The law was finalized in 1890 by Alfred Marshall. Demand - the relationship between all possible prices for a product and the amount of goods that buyers are willing to buy at these prices.Demand reflects, on the one hand, the need of the buyer for certain goods or services desire to purchase these goods or services in a certain amount and, on the other hand, the ability to pay for the purchase by price within the "accessible" range.Together with these generalized definitions, demand is characterized by a number of properties and quantitative parameters, of which, first of all, one should single outvolume or value demand. From the point of view of quantitative measurement, the demand for product , understood as the volume of demand, means the quantity of a given product that buyers (consumers) desire, are ready and have the financial opportunity to purchase over a certain period at certain prices.Demand quantity - the quantity of a good or service of a certain type and quality that a buyer is willing to buy at a given price within a certain period of time. The magnitude of demand depends on the income of buyers, the prices of goods and services, the prices of substitute goods and complementary goods, the expectations of buyers, their tastes and preferences.Law of demand — the value (volume) of demand decreases as the price of goods increases. Mathematically this means that there is an inverse relationship between the quantity demanded and the price (however, not necessarily in the form hyperbole) . That is, an increase in price causes a decrease in the quantity demanded, while a decrease in price causes an increase in the quantity demanded.The nature of the law of demand is not complicated. If the buyer has a certain amount of money for the purchase of this product, then he will be able to buy those less product the higher the price and vice versa. Of course, the real picture is much more complicated, since buyer can attract additional funds, buy another instead of this product - substitute product.

Non-price factors affecting demand:

• The level of income in society;
• Market size;
• Fashion, seasonality;
• Availability of substitute goods (substitutes);
• inflation expectations.

3) Demand curve

Demand Schedule (Demand Curve) is the relationship between the market price of a commodity and monetary terms demand for it. The demand curve shows the probable quantity of a good that can be sold in a certain time and at a certain price. The more elastic the demand, the higher the price can be charged for the product. Elasticity of demand is the reaction of the market to the absence of a product, the possibility of its replacement, the price of competitors, price reduction, the reluctance of buyers to change their consumption habits and look for more cheap products, improving the quality of goods, the natural rise in inflation on other factors.

4) Sentence(in economics) - a concept that reflects the behavior of a commodity producer in the market, his readiness produce (offer) any quantity of goods for a certain period of time under certain conditions.

It is quantitatively measured, expressed by the value, volume of the proposal. Supply refers to the quantity of goods and services that a producer is willing and able to sell at a given price in a given period of time. Offer volume(output) - the amount of goods that a commodity producer (firm) is ready to offer at a certain price for a certain period of time, all other things being equal. Offer amount is the quantity of a good that is available for sale at a given price. As a rule, there is a direct relationship between the price level and the quantity of goods. Raising prices leads to additional profits, allowing the manufacturer to expand production, attracting new producers to the market. Law of supply- with other factors unchanged, the value (volume) of supply increases as the price of the product increases. An increase in the supply of goods with an increase in its price is generally due to the fact that, at constant costs per unit of goods, with an increase in price, profit grows and it becomes profitable for the manufacturer (seller) to sell more product. The real picture of the market is more complicated than this simple scheme, but the trend expressed in it takes place.

Factors affecting the offer:

1. Availability of substitute products.

2. Availability of complementary goods (complementary).

3. The level of technology.

4. Volume and availability of resources.

5. Taxes and subsidies.

6. Natural conditions

7. Expectations (inflationary, socio-political)

8. Market size

5) Supply schedule (supply curve) shows the relationship between market prices and the amount of goods that producers are willing to offer.

The main factor influencing the movement of the supply curve is the cost of production. As you know, goods are manufactured by firms for profit. For example, farms grow wheat. They grow more wheat because this moment wheat is more profitable to sell than other crops. And vice versa. The main factor influencing the movement of the supply curve is technological progress. New seed, more efficient tractor, better computer program crop rotation - all this allows the farmer to reduce production costs and change the supply of his product. Production costs are a key element of the long-term effect on the "supply curve".

6) Economic balanceis the point where demand and supply are equal. In economics, economic balancecharacterizes a state in which economic forces are balanced and, in the absence of external influences, the (balanced) values ​​of economic variables will not change.

Market equilibrium- the situation in the market when the demand for a product is equal to its supply; the volume of the product and its price are called equilibrium or market clearing price. This price tends to remain unchanged in the absence of changes in supply and demand.

Market equilibrium is characterized by equilibrium price and equilibrium volume.

Equilibrium price(English) equilibrium price) is the price at which the quantity demanded in the market is equal to the quantity supplied. On a supply and demand graph, it is determined at the point of intersection of the demand curve and the supply curve.

Equilibrium volume(English) quantity) - the volume of supply and demand for goods at an equilibrium price.

7) Homework

3) If the real price is higher than the equilibrium price, there is an excess supply . Due to the fact that the price is higher than the equilibrium price, there is an increase in output, but consumers have a decrease in the desire and ability to buy goods. Therefore, there isoversupply of the product, which forces the company to lower prices.

6) If the real price is below the equilibrium price, there is a deficit the quantity demanded is greater than the quantity supplied. At a lower price, sellers will offer fewer goods, but the number of buyers will increase due tocompetition that has arisen between buyers, prices will rise.

4) This section reflects the loss of the seller, that is, they will sell the goods for a price below the equilibrium price, and this will be their loss.

5) This section reflects the loss of the buyer, that is, buyers will buy the goods at a price higher than the equilibrium price, and this will be their loss.
1) This plot reflects the seller's gain,that is, the excess of the selling price (market price) over the marginal cost of production.
2) This section reflects the consumer's gain, that is the difference between the maximum price a consumer can pay for a good (demand price) and the real (market) price of that good.
8) Scarcity and Surplus
When the magnitude of market demand, i.e. quantity of a money good exceeds the supply of goods that can be bought with this money, a situation is created which is called the amount of excess demand, ordeficit. On practice The first sign of a shortage is a noticeable decrease in the inventory that sellers always have in order to quickly respond to minor changes in demand.When stocks are clearly declining, sellers act in two ways. They either increase the production of their product, making additional profit from the increase in turnover, or raise the price of the remaining product, or do both at once. In the last two cases, the market price will go up, approaching the equilibrium price.As a result of such actions of sellers, buyers will eventually receive either a quantity of goods sufficient to fulfill their money demand, or such a market price at which the surplus of money formed by them disappears with the same quantity of goods.In cases where the value of the supply of goods on the market exceeds the demand for it, i.e. the amount of money for which it can be exchanged, there is a commoditysurplus, or excess.The surplus of goods is reflected, first of all, in the growth of its stocks. Sellers respond to stock buildup by either reducing production of goods, lowering prices, or both. As a result, the price of the good falls to the level of the equilibrium price and its quantity is reduced to a value equal to money demand. When this happens, the market returns to a state of equilibrium.
9) Demand curve can be used to determinegain (surplus) of the consumer - this is the difference between the maximum price that a consumer can pay for a product (demand price) and the real (market) price of this product.

The demand price for a good (P D) is determined by the marginal utility of each unit of the good, and the market price of a good is determined by the interaction of demand (D) and supply (S). As a result of this interaction, the product is sold at the market price (P e) (Fig. 6.2). Therefore, the consumer wins by buying the product cheaper than he could pay for it. This gain is equal to the area of ​​the shaded triangle P D EP e (Fig. 6.2).
Knowing the marginal cost (MC) allows you to determine manufacturer's gain. The fact is that the minimum price at which a firm can sell a unit of output without loss should not be lower than marginal cost (MC) (the increase in costs associated with the production of each subsequent unit of output) (Fig. 6.2). Any excess of the market price of a unit of output over its MC will mean an increase in the firm's profit. In this way, manufacturer's gain is the excess of the selling price (market price) over the marginal cost of production. The firm receives such a surplus from each sold unit of goods at a market price (P e) exceeding marginal cost(MS) production of a given unit. Thus, by selling the volume of goods (Q e) (with different MS for each unit of output from 0 to Q E) for P E, the firm will receive a gain equal to the shaded area P e EP S .
10)Change in the size of the offer and offer

1. A change in the supply is observed when the price of the product in question and other factors of market conditions remain unchanged and implies movement along the supply curve (arrow No. 1)
2. A change in supply, on the contrary, means a change in the entire supply function due to a change in any non-price factors at a constant price for the analyzed product (arrow No. 2)

Q - the number of products that the manufacturer is ready to offer
S - offer

Non-price supply factors include:

• change in production costs as a result of technical innovations, changes in sources of resources, changes associated with tax policy, as well as characteristics that affect the formation of the cost of production factors.
• Market entry of new firms.
• Changes in the prices of other goods leading to the exit of the firm from the industry.
• Natural disasters
• Political actions and wars
• Forward Economic Expectations

• Firms in the industry, when prices increase, use reserve or quickly commissioned new capacities, which automatically leads to an increase in supply.
• In the event of a prolonged increase in prices, other producers will rush into this industry, which will further increase production and, as a fact, an increase in supply is possible.

Technological progress plays a huge role on the supply curve. It allows you to reduce production costs and vary the number of goods on the market. The analysis of the supply schedule is largely determined by the production technology used by the manufacturer, the availability and availability of raw materials used in the manufacture of goods. If the mobility of production of the resources used in it is high, then the supply curve will have a flatter form, i.e. flattened down.

11) Changes in demand and magnitude of demand

When analyzing the market situation, it is necessary to make a clear distinction between demand and the magnitude of demand, as well as between changes in the magnitude of demand and changes in the demand itself for a given product.

Change in demand observed when the price of the commodity in question changes and all read parameters (tastes, incomes, prices for other goods) remain unchanged. On the graph, such a change is reflected in the movement along the demand curve from the point (arrow No. 1). Change in demand occurs when the market prices for the product in question remain unchanged, i.e. under the influence of any non-price factors, and is reflected on the chart by a shift in the demand curve to the right or left (arrow No. 2).

Factors that affect demand at constant prices for the product in question are called non-price determinants of demand. Among the most significant non-price determinants, economists distinguish:

1. Tastes and preferences of consumers.
2. Consumer income.

For the overwhelming group of normal quality goods, an increase in income causes an increase in demand at the same prices and a corresponding shift of the demand curve to the right.

However, for relatively inferior goods of comparatively lower quality, an increase in income encourages the consumer to replace the relatively inferior product with a higher quality one, and thereby reduces demand. As a result, the demand curve shifts to the left.

3. Number of consumers.

Ceteris paribus, the greater the number of potential buyers, the higher the market demand for the product.

4. Prices for other goods.

This factor is non-price, because assumes that the price of the commodity in question remains unchanged. The price of any other commodity, except for the one we are analyzing, acts as a non-price or exogenous factor.

12) A table that reflects how changes in supply and demand are reflected in the equilibrium price and equilibrium quantity.

Demand (D)	Offer (S)	Equilibrium price (P)	Equilibrium quantity( Q)
increased	Hasn't changed	increased	Increased
Decreased	Hasn't changed	Decreased	Decreased
Did not change	Increased	Decreased	Increased
Did not change	Decreased	increased	Decreases	It may increase, it may decrease, and it may not change.

If only changes sentence with the same demand and what happens to P and Q (an increase in supply causes a decrease in P and an increase in Q; a decrease in supply causes an increase in P and a decrease in Q)

If only changes demand with the same offer what happens to P and Q (an increase in demand increases both P and Q; a decrease in demand contributes to a decrease in both P and Q)

If a demand and sentence growing at the same time, what happens to P and Q? (in this case, Q also increases, and P may increase, decrease or not change - this will depend on how much demand and supply change in relation to each other: P will not change if demand and supply grow equally; P will increase, if demand rises more than supply; P will decrease if supply rises more than demand).

If a demand and sentence decrease simultaneously, what happens to P and Q? (in this case, Q is also reduced, and P may increase, decrease or not change - this will depend on how much demand and supply change in relation to each other: if demand and supply decrease equally, then P will not change; P will increase , if supply falls more than demand; P will decrease if demand falls more than supply).

If a demand is growing and sentence decreases, what happens to P and Q? (in this case, P will definitely increase, and Q may increase, decrease or not change - this will depend on how much demand and supply change in relation to each other: Q can increase if demand increases to a greater extent than supply decreases; Q may not change if supply and demand change equally; Q may decrease if supply decreases more than demand increases).

If a demand decreases and sentence grows, what happens to P and Q? (in this case, P is definitely decreasing, and Q may increase, decrease or not change - this will depend on how much demand and supply change in relation to each other: Q will not change if demand and supply change equally; Q will increase, if supply increases more than demand decreases; Q will decrease if demand decreases more than supply increases).