12. "Demand"

What does "demand" mean in economic theory? A customer”s willingness and ability to buy a product or service at a particular time and place.

What is effective demand?

Effective demand, that is desire plus ability and willingness to pay, influences and helps to determine prices.

What is the definition of demand?

Economists define demand as a consumer’s desire or want, together with his willingness to pay for what he wants. We can say that demand is indicated by our willingness to offer money for particular goods or services.

What is elasticity of demand?

Elasticity of demand is a measure of the change in the quantity of a good, in response to demand. The change in demand results from a change in price. Demand is inelastic when a good is regarded as a basic necessity4, but particularly elastic for non-essential commodities. Accordingly, we buy basic necessities even if the prices rise steeply, but we buy other things only when they are relatively cheap.

What is expressed by the Law of Demand?

In economics the relationship of demand and price is expressed by the Law of Demand. It says that the demand for an economic product varies inversely with its price. In other words, if prices are high the quantities demanded will be low. If prices are low the quantities demanded will be high

13."Supply"

What do business people think of supply?

Business people think of supply as their production. As they see it, supply means the quantity of a product supplied at the price prevailed at the time.

What does the term "supply" denote in economic theory?

In economic theory, the term «supply» denotes the amount of a commodity or service offered for sale at a given price. Just as in the case of demand, supply is determined also by factors other than price, the most important being the cost of production and the period of time allowed to supply to adjust to a change in prices.

What factors is supply determined by? supply is determined also by factors other than price, the most important being the cost of production and the period of time allowed to supply to adjust to a change in prices.

What is called "supply function"? The supply curve is the graphical representation of the supply function, i.e., of the relationship between price and supply. It shows us how many units of a particular commodity or service would be offered for sale at various prices, assuming that all other factors (such as the cost of production, the period of time involved) remain constant.

What happens when the Law of Supply operates? The law of supply states that the quantity of an economic product offered for sale varies directly with its price. If prices are high suppliers will offer greater quantities for sale. If prices are low, they will offer smaller quantities for sale.