See what "Demand" is in other dictionaries. Supply and demand Factors of the law of demand

Elasticity of demand

Change in demand

Resource demand

Price elasticity

Influence and dependence of demand on supply

Demand(in economics) - this is the quantity of a product that buyers can and are willing to buy at a given price. Full demand for product is the set of demands for this product on various prices.

The concept of demand, its elasticity

Demand is determined by the solvent needs of buyers. Demand is plotted as a graph showing the quantity of goods that consumers are willing and able to buy for some the price of the possible prices for a certain period of time. It shows the quantity of goods for which demand will be presented at different prices and the quantity which consumers will buy at different possible prices. demand is the maximum, according to which acquirer ready to buy this product. Demand quantities must have a certain value and relate to a certain period of time. The fundamental property of demand is as follows: with all other parameters unchanged, a decrease in price leads to a corresponding increase in the amount of demand. There are times when the evidence contradicts the law demand, but this does not mean its violation, but only a violation of the assumption, other things being equal. Any price set by the firm, one way or another, will affect the level of demand for the product. The relationship between price and the resulting level of demand is represented by the well-known demand curve. The curve shows how much of the product will be sold at the market for a specific period of time at different prices that may be charged within a given period of time. In a normal situation, demand and price are inversely proportional, that is, the higher the price, the lower the demand. And accordingly, the lower the price, the higher the demand. So by raising the price of a product, it will sell less of the product. Consumers with limited budgets, when faced with a choice of alternative products, will buy more of those products whose prices are acceptable to them.

Most demand curves tend downward in a straight or curved line, which

typical for consumer goods. However, in the case of prestigious goods, the demand curve has a positive slope, that is, as the price of a product rises, the number of sales increases. In this case, consumers considered the higher price to be indicative of the higher quality or desirability of the perfume. However, if the price rises further, the demand for goods may fall.

For the activist market you need to know how sensitive the demand is to price changes. Elasticity of demand - a change in demand for a given product under the influence of economic and social factors associated with price changes; demand can be elastic if the percentage change in its volume exceeds the decline in the price level, and inelastic if the rate of decline in prices is higher than the increase in demand. Economists use the concept of price elasticity to determine the sensitivity of consumers to changes in the price of a product. If small changes in price lead to significant changes in the amount of purchased products, then such demand is called relatively elastic or simply elastic. If a significant change in price leads to a small change in the number of purchases, then such demand is relatively inelastic or simply inelastic.

If the change in price does not lead to any change in the quantity of products requested, then such demand is completely inelastic. If the least price drop encourages buyers to increase purchases from zero to the limit of their capabilities, then such demand is completely elastic.

What will determine the price elasticity of demand? demand is likely to be less elastic under the following circumstances:

There is little or no replacement for the product, or there are no competitors;

buyers do not immediately notice the increase in prices;

shoppers are slowly changing their buying habits and

are in no hurry to look for cheaper goods;

buyers believe the increased price is justified

improved product quality, natural growth inflation etc.

Demand value

It is necessary to distinguish between the concepts of demand and demand. The amount of demand represents the willingness to buy a certain amount of a product at one specific price, and the total demand for a commodity is a set of quantities demanded at all possible prices, that is, the functional dependence of the quantity demanded on the price. Generally, the higher the price, the lower the amount demanded, and vice versa. In some cases, the so-called paradoxical demand (Giffen's product) is noted - an increase in the value of demand with an increase in price. Demand is also characterized by elasticity. If, when the price rises or falls, the product is bought in practically the same quantities, then such a demand is called inelastic. If the change in price leads to a sharp change in the amount of demand, then it is elastic.

As a rule, the demand for basic necessities is inelastic, the demand for other goods is usually more elastic. The demand for luxury goods or status trappings is often paradoxical. One of the fundamental concepts of the market economy, meaning the desire, the intention of buyers, consumers, supported by a monetary opportunity, to purchase a given product. S. is characterized by its value, meaning the amount of product that is willing and able to purchase at a given price at a given period time. The volume and structure of S. depend both on product prices and on other, non-price factors, such as fashion, consumer income, and so on. on the price of other goods, including substitute goods and related, related goods. There are the following types of C: individual - C. of one person, market - C. published on the market and aggregate - C in all markets for a given product or for all produced and sold goods. Demand is characterized by its value, which means the amount of the product that the buyer is willing and able to purchase at a given price at a given period time. The volume and structure of demand depend on both product prices and non-price factors such as fashion, income consumers, as well as on the price of other goods, including substitute goods.

Distinguish:

individual demand,

market demand,

aggregate demand.

For managers company(by the firm) it is important to more or less reliably know the volume of market demand, market capacity, the expected demand for those goods that firm(the organization) will offer to the market. The following types of demand differ depending on the level of demand:

negative demand,

latent demand,

falling demand,

irregular demand,

full demand,

excessive demand

irrational demand,

lack of product.

The given conditions of demand correspond to a certain type of marketing. For managers According to the analysis of market conditions, an important task is not only knowledge about the availability of demand, but the need to determine the amount of demand, both current (at a given time) and expected in the future (prospective), in order to reasonably determine the development of production of goods. The level of individual (individual purchaser) demand and market demand depends on numerous factors that must be taken into account in marketing management, in the management of a firm (firm).

Market and the law of demand

Market - an indirect, mediated relationship between producers and consumers of products in the form of sale and purchase of goods, the sphere of sales and commodity-money relations, as well as the entire set of means, methods, tools, organizational and legal norms, structures, etc., ensuring the functioning of such relationships. The market is the only system of purchase and sale relations, the structural elements of which are the markets for goods, capital, labor, securities, ideas, information etc. The market is the backbone of a market economy.

A market is an instrument or mechanism that brings together buyers (bearers of demand) and sellers (suppliers) of certain goods and services. Some markets are local, while others are international or national. Some are distinguished by personal contact between the bearer of the demand and the supplier, while others are impersonal - on them the buyer and salesman never see or do not know each other at all,

The state of the market is determined by the ratio of the amount of demand and suggestions

Ask offer- interdependent elements of the market mechanism, where demand is determined by the solvent need of buyers (consumers), and - by the totality of goods offered sellers(by manufacturers); the ratio between them adds up to an inversely proportional relationship, determining the corresponding changes in the level of prices for goods.

Demand is depicted in the form of a graph showing the quantity of goods that consumers are willing and able to buy at a certain price from the possible prices for a certain period of time. Demand expresses a number of alternative possibilities that can be presented in the form of a table. It shows the quantity of goods for which (other things being equal) demand will be presented at different prices. Demand indicates the quantity of a product that consumers will buy at different possible prices. Bid price is the maximum price at which the purchaser is ready to buy the given product.

Demand quantities must have a certain value and relate to a certain period of time. The fundamental property of demand is as follows: with all other parameters unchanged price drop leads to a corresponding increase in the amount of demand. There are times when practical data contradict the law of demand, but this does not mean its violation, but only a violation of the assumption, other things being equal.

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The existence of the law of demand is confirmed by some facts:

1. Usually people actually buy a given product more at a low price than at a high price. The very fact that companies are doing “sales” is a clear indication of their belief in the law of demand. Enterprises reduce their inventories not by raising prices, but by lowering them.

Investor encyclopedia. 2013 .

Synonyms:

Antonyms:

See what "Demand" is in other dictionaries:

demand- demand, and u ... Russian spelling dictionary

Demand- The law of supply and demand Demand (in the economy) is the relationship between the price (P) and the amount of goods (Q) that buyers can and wish to buy at a strictly defined price, within a certain period of time. Full demand for the product ... ... Wikipedia

DEMAND- (demand) The number of goods and services that buyers wish to purchase. The demand function establishes the relationship between the volume of demand and its determining factors, which include: consumer income, the price of a given product and prices ... ... Economic Dictionary

DEMAND- DEMAND, demand, husband. 1. Action according to Ch. ask in 1, 2 and 3 digits ask (colloquial). "Trying is not torture, demand is not a problem." (last) "You were not bored to answer the demand." Nekrasov. “They embarrassed me with an incessant demand about the master: what, they say, but how ... ... Ushakov's Explanatory Dictionary

DEMAND- the need for goods and services, provided with the necessary monetary and other means of payment (purchasing power). Dictionary of financial terms. Demand Demand is a specific need supported by purchasing power. ... ... Financial vocabulary

Market Mechanism- it is a mechanism of interconnection and interaction of the main elements of the market - demand, supply, prices, and the main market.

The market mechanism operates on the basis of economic laws. Change in demand, change in supply, change, value, utility and profit. allows you to satisfy only those and societies that are expressed through demand.

Demand law

Demand Is a solvent need for a product or service.

Demand value Is the quantity and that buyers are willing to purchase at a given time, at a given place, at given prices.

The need for some good implies the desire to possess goods. Demand presupposes not only desire, but also the possibility of acquiring it at prices existing on the market.

Types of demand:

(Production demand)

Factors affecting demand

The amount of demand is influenced by a huge number of factors (determinants). Demand depends on:

use of advertising
fashions and tastes
consumer expectations
changes in environmental preferences
availability of goods
incomes
usefulness of things
prices set for interchangeable goods
and also depends on the size of the population.

The maximum price that buyers are willing to pay for a certain amount of a given product or service is called at the cost of demand(denote)

Distinguish exogenous and endogenous demand.

Exogenous demand - it is such a demand, the changes of which are caused by government intervention, or the introduction of any forces from the outside.

Endogenous demand(domestic demand) - formed within society due to the factors that exist in this society.

The relationship between the amount of demand and its determining factors is called the demand function.
In its most general form, it is written as follows where:

If all the factors determining the amount of demand are considered unchanged for a given period of time, then we can go from the general demand function to price demand functions:... The graphical representation of the demand function from the price on the coordinate plane is called demand curve(picture below).

Changes in the market associated with the quantitative supply of a product always depend on the price set for this product. There is always a certain ratio between the market price of a commodity and the quantity for which demand is presented. The high price of goods limits the demand for it, a decrease in the price of this product usually characterizes an increase in demand for it.

Today, virtually every developed country in the world is characterized by a market economy in which state intervention is minimal or absent. Prices for goods, their assortment, production and sales volumes - all this develops spontaneously as a result of the work of market mechanisms, the most important of which are supply and demand law... Therefore, let us consider at least briefly the basic concepts of economic theory in this area: supply and demand, their elasticity, demand curve and supply curve, as well as their determining factors, market equilibrium.

Demand: concept, function, schedule

Very often we hear (see) that concepts such as demand and the amount of demand are confused, considering them synonymous. This is wrong - demand and its value (volume) are completely different concepts! Let's consider them.

Demand (English "Demand") - the solvent need of buyers for a certain product at a certain price level for it.

Demand value(demand volume) - the amount of goods that buyers want and can purchase at a given price.

So, demand is the need of buyers for a certain product, provided by their ability to pay (that is, they have money to satisfy their need). And the amount of demand is a specific amount of goods that buyers want and can (they have money for) buy.

Example: Dasha wants apples and she has money to buy them - this is demand. Dasha goes to the store and buys 3 apples, because she wants to buy exactly 3 apples and she has enough money for this purchase - this is the amount (volume) of demand.

There are the following types of demand:

individual demand- an individual specific buyer;
total (aggregate) demand- all buyers available on the market.

Demand, the relationship between its value and price (as well as other factors) can be expressed mathematically, in the form of a demand function and a demand curve (graphical interpretation).

Demand function- the law of dependence of the magnitude of demand on various factors influencing it.

- a graphical expression of the dependence of the value of demand for a certain product on the price of it.

In the simplest case, the demand function is the dependence of its value on one price factor:

P is the price for this product.

The graphical expression of this function (demand curve) is a straight line with a negative slope. A typical linear equation describes such a demand curve:

where: Q D - the amount of demand for this product;
P is the price for this product;
a - coefficient specifying the displacement of the beginning of the line along the abscissa axis (X);
b - coefficient specifying the angle of inclination of the line (negative number).

Linear demand graph expresses the inverse relationship between the price of a product (P) and the number of purchases of this product (Q)

But, in reality, of course, everything is much more complicated and the amount of demand is influenced not only by the price, but also by many non-price factors. In this case, the demand function takes the following form:

where: Q D - the amount of demand for this product;
P X - the price of this product;
P is the price of other related goods (substitutes, supplements);
I - buyers' income;
E - buyers' expectations regarding price increases in the future;
N is the number of potential buyers in the given region;
T - tastes and preferences of buyers (habits, adherence to fashion, traditions, etc.);
and other factors.

Graphically, such a demand curve can be represented as an arc, but this is again a simplification - in reality, the demand graph can have any of the most bizarre shapes.

In reality, demand depends on many factors and the dependence of its value on price is non-linear.

Thus, factors affecting demand:
1. Price factor of demand- the price of this product;
2. Non-price factors of demand:

the presence of interconnected goods (substitutes, complements);
the level of buyers' income (their ability to pay);
the number of buyers in a given region;
tastes and preferences of buyers;
customer expectations (regarding price increases, future needs, etc.);
other factors.

Demand law

To understand market mechanisms, it is very important to know the basic laws of the market, which include the law of supply and demand.

Demand law- with an increase in the price of a product, the demand for it decreases, with other factors unchanged, and vice versa.

Mathematically, the law of demand means that there is an inverse relationship between the amount of demand and the price.

From the philistine point of view, the law of demand is completely logical - the lower the price of a product, the more attractive its purchase and the more units of the product will be bought. But, oddly enough, there are paradoxical situations in which the law of demand fails and acts in the opposite direction. This is manifested in the fact that the amount of demand increases as the price rises! Examples include the Veblen effect or Giffen's products.

The law of demand has theoretical background... It is based on the following mechanisms:
1. The income effect- the desire of the buyer to purchase a larger amount of this product while reducing the price of it, while not reducing the volume of consumption of other goods.
2. Substitution effect- the willingness of the buyer, when the price of a given product is reduced, to give preference to him, giving up other more expensive goods.
3. The law of diminishing marginal utility- as this product is consumed, each additional unit will bring less and less satisfaction (the product is "boring"). Therefore, the consumer will be ready to continue buying this product only if its price decreases.

Thus, a change in price (price factor) leads to changes in demand... Graphically, this is expressed in moving along the demand curve.

Change in the value of demand on the graph: moving along the line of demand from D to D1 - an increase in the volume of demand; from D to D2 - decrease in demand

The impact of other (non-price) factors leads to a shift in the demand curve - changes in demand. With an increase in demand, the graph shifts to the right and up, with a decrease in demand - to the left and down. Growth is called - expansion of demand, decrease - narrowing demand.

Change in demand on the chart: shift of the demand line from D to D1 - narrowing of demand; from D to D2 - demand expansion

Elasticity of demand

With an increase in the price of a product, the amount of demand for it decreases. When the price goes down, it increases. But this happens in different ways: in some cases, a slight fluctuation in the price level can cause a sharp rise (fall) in demand, in others, a price change over a very wide range will practically not affect demand in any way. The degree of this dependence, the sensitivity of the amount of demand to price changes or other factors is called the elasticity of demand.

Elasticity of demand- the degree of change in the value of demand when the price (or other factor) changes in response to a change in price or other factor.

A numerical indicator reflecting the degree of such a change - coefficient of elasticity of demand.

Respectively, price elasticity of demand shows how much the volume of demand will change when the price changes by 1%.

Arc Price Elasticity of Demand- used when you need to calculate the approximate elasticity of demand between two points on the arc demand curve. The more convex the demand arc is, the higher the error in determining the elasticity will be.

where: E P D - price elasticity of demand;
P 1 - the original price of the product;
Q 1 - the initial value of the demand for the product;
P 2 - new price;
Q 2 - the new value of demand;
ΔP - price increment;
ΔQ is the increment in the amount of demand;
P cf. - average prices;
Q av. Is the average demand.

Point price elasticity of demand- it is applied when the demand function is set and there are values of the initial demand value and the price level. It characterizes the relative change in the value of demand with an infinitely small change in price.

where: dQ is the demand value differential;
dP - price differential;
P 1, Q 1 - the value of the price and the amount of demand at the analyzed point.

The elasticity of demand can be calculated not only by price, but, for example, by the income of buyers, as well as by other factors. There is also cross-elasticity of demand. But we will not consider this topic so deeply here, a separate article will be devoted to it.

Depending on the absolute value of the elasticity coefficient, the following types of demand are distinguished ( types of demand elasticities):

Perfectly inelastic demand or absolute inelasticity (| E | = 0). When the price changes, the amount of demand remains practically unchanged. Essential goods (bread, salt, medicine) are close examples. But in reality there are no goods with completely inelastic demand for them;
Inelastic demand (0 < |E| < 1). Величина спроса меняется в меньшей степени, чем цена. Примеры: товары повседневного спроса; товары, не имеющие аналогов.
Unit Elasticity Demand or unit elasticity (| E | = -1). Price and demand changes are fully proportional. The volume of demand rises (falls) at exactly the same rate as the price.
Elastic demand (1 < |E| < ∞). Величина спроса изменяется в большей степени, чем цена. Примеры: товары, имеющие аналоги; предметы роскоши.
Perfectly elastic demand or absolute elasticity (| E | = ∞). A slight change in price immediately increases (decreases) the volume of demand by an unlimited amount. In reality, there is no product with absolute elasticity. A more or less close example: liquid financial instruments traded on an exchange (for example, currency pairs on Forex), when a small price fluctuation can cause a sharp rise or fall in demand.

Sentence: concept, function, schedule

Now let's talk about another market phenomenon, without which demand is impossible, its inseparable companion and opposing force - supply. Here, one should also distinguish between the offer itself and its size (volume).

Offer (English "Supply") - the ability and willingness of sellers to sell goods at a given price.

Amount of supply(supply volume) - the quantity of goods that sellers are willing and able to sell at a given price.

Distinguish the following types of offer:

individual offer- a specific individual seller;
total (aggregate) supply- all sellers present on the market.

Suggestion function- the law of the dependence of the amount of supply on various factors influencing it.

- a graphical expression of the dependence of the value of the offer for a certain product on the price for it.

In simplified terms, the supply function is the dependence of its value on the price (price factor):

P is the price for this product.

The supply curve in this case is a straight line with a positive slope. The following linear equation describes this supply curve:

where: Q S - the amount of supply for this product;
P is the price for this product;
c - coefficient specifying the displacement of the beginning of the line along the abscissa (X);
d - coefficient specifying the angle of inclination of the line.

Linear supply graph expresses a direct relationship between the price of a product (P) and the number of purchases of this product (Q)

The supply function, in its more complex form, taking into account influence and non-price factors, is presented below:

where Q S is the amount of supply;
P X - the price of this product;
P 1 ... P n - prices of other interconnected goods (substitutes, complements);
R - availability and nature of production resources;
K - applied technologies;
C - taxes and subsidies;
X - natural and climatic conditions;
and other factors.

In this case, the supply curve will be in the form of an arc (although this is again a simplification).

In real conditions, the supply depends on many factors and the dependence of the supply volume on the price is non-linear.

Thus, factors influencing the supply:
1. Price factor- the price of this product;
2. Non-price factors:

availability of complementary and substitute goods;
the level of technology development;
the amount and availability of the required resources;
natural conditions;
expectations of sellers (producers): social, political, inflationary;
taxes and subsidies;
the type of market and its capacity;
other factors.

Supply law

Supply law- with an increase in the price of a product, the supply for it increases, with other factors unchanged, and vice versa.

Mathematically, the law of supply means that there is a direct relationship between the amount of supply and the price.

The law of supply, like the law of demand, is very logical. Naturally, any seller (manufacturer) strives to offer his goods at a higher price. If the price level in the market rises, it is profitable for sellers to sell more, if it falls, it is not.

A change in the price of a product leads to changes in supply... On the chart, this is manifested by movement along the supply curve.

Change in the amount of supply on the chart: movement along the supply line from S to S1 - an increase in the supply volume; from S to S2 - decrease in supply volume

A change in non-price factors leads to a shift in the supply curve ( changing the proposal itself). Expansion of the offer- shift of the supply curve to the right and down. Narrowing the offer- shift to the left and up.

Change in supply on the chart: shift of the supply line from S to S1 - supply narrowing; from S to S2 - offer extension

Elasticity of supply

Supply, like demand, may vary in degree depending on price changes and other factors. In this case, one speaks of the elasticity of the proposal.

Elasticity of supply- the degree of change in the amount of supply (the number of offered goods) in response to a change in price or other factor.

A numerical indicator reflecting the degree of such a change - supply elasticity coefficient.

Respectively, price elasticity of supply shows how much the supply value will change when the price changes by 1%.

The formulas for calculating the arc and point elasticity of supply with respect to price (Eps) are completely analogous to the formulas for demand.

Types of supply elasticity by price:

absolutely inelastic offer(| E | = 0). The price change does not affect the value of the supply at all. This is possible in the short term;
inelastic offer (0 < |E| < 1). Величина предложения изменяется в меньшей степени, чем цена. Присуще краткосрочному периоду;
single elasticity proposal(| E | = 1);
flexible offer (1 < |E| < ∞). Величина предложения изменяется в большей степени, чем соответствующее изменение цены. Характерно для долгосрочного периода;
absolutely flexible offer(| E | = ∞). The amount of supply changes infinitely with a slight change in price. Also typical for the long term.

It is noteworthy that situations with perfectly elastic and completely inelastic supply are quite real (in contrast to similar types of demand elasticities) and are encountered in practice.

Supply and demand "meet" in the market, interact with each other. In free market relations without strict government regulation, they will sooner or later balance each other (the French economist of the 18th century spoke about this). This state is called market equilibrium.

- market situation in which demand is equal to supply.

Market equilibrium is graphically expressed market equilibrium point- the point of intersection of the demand curve and the supply curve.

If supply and demand do not change, the market equilibrium point tends to remain unchanged.

The price corresponding to the market equilibrium point is called equilibrium price, quantity of goods - equilibrium volume.

Market equilibrium is graphically expressed by the intersection of the demand (D) and supply (S) graphs at one point. This point of market equilibrium corresponds to: P E - equilibrium price, and Q E - equilibrium volume.

There are different theories and approaches explaining how exactly market equilibrium is established. The most famous are the approach of L. Walras and A. Marshall. But this, as well as the cobweb-like model of equilibrium, the seller's market and the buyer's market, is a topic for a separate article.

If very succinctly and simplified, then the mechanism of market equilibrium can be explained as follows. At the equilibrium point, everyone (both buyers and sellers) is happy. If one of the parties gains an advantage (the market deviates from the equilibrium point in one direction or the other), the other side will be unhappy and the first party will have to make concessions.

For example: the price is higher than the equilibrium one. It is profitable for sellers to sell goods at a higher price and the supply rises, there is a surplus of goods. And buyers will be unhappy with the rise in the price of the product. In addition, the competition is high, the supply is excessive and sellers, in order to sell the goods, will have to reduce the price until it comes to an equilibrium value. At the same time, the supply volume will also decrease to the equilibrium volume.

Or other example: the volume of goods offered on the market is less than the equilibrium volume. That is, there is a shortage of goods on the market. In such conditions, buyers are willing to pay a higher price for the product than that at which it is currently being sold. This will encourage sellers to increase their supply while increasing prices. As a result, the price and volume of demand / supply will come to an equilibrium value.

In fact, this was an illustration of the theories of market equilibrium by Walras and Marshall, but as already mentioned, we will consider them in more detail in another article.

Galyautdinov R.R.

Demand Is the amount of goods that buyers want and can purchase for a certain period of time at all possible prices for this product.

The so-called the law of demand, the essence of which can be expressed as follows: all other things being equal, the value of demand for a product is the higher, the lower the price of this product, and vice versa, the higher the price, the lower the value of demand for the product. The operation of the law of demand is explained by the existence of the income effect and the substitution effect. The income effect is expressed in the fact that when the price of a product decreases, the consumer feels richer and wants to buy more of the product. The substitution effect consists in the fact that when the price of a product decreases, the consumer seeks to replace this cheaper product with others whose prices have not changed.

The concept of "demand" reflects not only the desire, but also the ability to purchase a product, ie, as a rule, it implies not just a need for a product, but an effective demand for this product. If there is a need for a product, but there is no opportunity to purchase a product, then there is no demand (effective demand) for this product. For example, a certain consumer has a desire to buy a car for 1 million rubles, but he does not have such an amount. In this case, we have a desire, but we do not have the opportunity to pay, so there is no demand for a car from this consumer.

The law of demand is limited in the following cases:

in case of rush demand caused by the expectation of buyers of price increases;
for some rare and expensive goods, the purchase of which remains a means of accumulation (gold, silver, precious stones, antiques, etc.);
when demand is switched to newer and better products (for example, when demand is switched from typewriters to home computers, lower prices for typewriters will not lead to an increase in demand for them).

The change in the quantity of goods that buyers want and can purchase, depending on the change in the price of this product, is called changes in the amount of demand. In fig. 4.1 graphically depicts the relationship between the price of a vacuum cleaner and the amount of demand for it. A change in the amount of demand is a movement along the demand curve.

Rice. 4.1.

D (eng. demand ) - demand; R (eng. price ) - price; Q (eng. Quantity ) - the amount of demand

If the price of a vacuum cleaner drops from 30 to 20 thousand rubles, then the value of demand for it will increase from 200 to 400 pcs. daily and vice versa.

However, price is not the only factor influencing the willingness and willingness of consumers to purchase a product. Changes caused by the influence of all factors other than price are called changes in demand. All these and other factors (the so-called non-price) act both in the direction of increasing and decreasing demand.

Non-price factors include changes:

in the income of the population. If the income of the population grows, then the buyers have a desire to purchase more goods, regardless of their prices. For example, there is a growing demand for high quality clothing and footwear, durable goods, real estate, etc .;
in the structure of the population. For example, an increase in fertility leads to an increase in the demand for baby products; the aging of the population entails an increase in the demand for medicines, items of care for the elderly;
prices for other goods. For example, an increase in prices for beef may lead to an increase in demand for a substitute product - poultry, etc .;
consumer tastes, fashion, habits, etc. and other factors not related to price;
in the expectations of buyers. So, if they expect that soon the price of the product will decrease, then at the moment they can reduce their demand.

In fig. 4.2 The influence of non-price factors on demand can be depicted as a shift in the demand curve to the right (growth in demand) or to the left (decline in demand).

Rice. 4.2.

D, D1, D2 - polls respectively initial, increased, decreased

What is an offer?

Offer - it is the quantity of a product that sellers want and can offer over a certain period of time at all possible prices for this product.

Supply law consists in the fact that, other things being equal, the quantity of goods offered by sellers is the higher, the higher the price of this product, and vice versa, the lower the price, the lower the value of its supply.

In fig. 4.3 graphically depicts the relationship between the price of a product and the amount that sellers are ready to offer for sale. Moving along the supply curve is called a change in supply. If the price of a vacuum cleaner rises from 20 to 30 thousand rubles, then the number of offered vacuum cleaners will increase from 200 to 400 pcs. daily and vice versa.

Rice. 4.3.

S (eng. supply ) - offer; R - price; Q - supply value

In addition to the offer price, non-price factors also affect, among which the following stand out:

changes in the costs of the firm. Reducing costs as a result of, for example, technical innovations or lower prices for raw materials and supplies leads to an increase in supply. Conversely, increases in costs as a result of higher raw material prices or additional taxes on producers cause a decrease in supply;
tax cuts for producers. Helps to stimulate the growth of supply, on the contrary, a decrease in subsidies from the state can lead to a decrease in supply;
increase (reduction ) the number of firms in the industry. Leads to an increase (decrease) in supply.

In fig. 4.4 the influence of non-price factors on supply is depicted as a shift of the supply curve to the right (supply growth) or to the left (supply decrease). In this case, they talk about a change in the proposal.

Rice. 4.4.

S, S1, S2 - supply respectively initial, increased, decreased

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Demand and its characteristics.

Each independent farm that enters into relations with other independent farms creates supply and demand on the market. Let's start with a demand analysis.

The desires of the individual in a market economy are transformed into the concept of demand. Naturally, demand cannot be equated with need as such: if a person is in need of some good, but he has no money, then he does not have consumer demand. Consequently, demand is an effective need.

Demand is influenced by a number of market factors: prices for requested goods, buyers' incomes, their tastes and preferences, the number of buyers in the market, prices of substitute and complemented goods. Moreover, the consumer is usually presented with a market where it is possible to choose an alternative amount of goods of the same name in demand at different prices. For the same money, a person buys more products if their price decreases, and vice versa.

Demand function- this is the relationship between the desires of consumers to have a particular product (demand for the product) and its determining factors. The general demand function can be represented as follows:

Qd = f (P, I, T, Ps, Pc, N, Ес),

where Qd- the volume of demand;

P - the price of the product;

I- consumer income;

T - tastes and preferences of consumers;

Ps- the price of interchangeable goods;

Pc- the price of complementary goods;

N- the number of buyers of this product;

EU- consumer expectations.

Thus, the quantity demanded is a function of a number of variables. First of all, it depends on the price .Price- This is the amount that the consumer is willing to pay for a certain amount of goods.

Suppose that all factors, except the first (the price of a given product), are unchanged. Then the amount of demand will depend only on the price R:

Qd = f(P).

Let's consider this dependency with a simple example. Suppose that in a local market people will buy a different number of apples if their price decreases as shown in the demand scale (Table 2.1).

Demand scale shows how many items can be bought at different prices for a given period. Analysis of this scale makes it easier to identify the relationship between price and demand.

Demand law states: ceteris paribus, the demand for goods in quantitative terms changes inversely with the price.

The higher the price of a good, the less demand for it from buyers, and, conversely, the lower the price of a good, the greater the demand.

Such a quantitative dependence is presented in the form of a graph (Fig. 2.1). Here is taken the same conditional example of selling apples for a month

Rice. 2.1. Demand curve

the same market. Apple prices are plotted on the ordinate R(from English... price - price). The abscissa shows the number of apples for which demand is presented Q(from English quantity - quantity). Curve D(from English... demand) on the graph shows that when the price rises, the solvent need of people decreases and the amount of demand decreases, and vice versa, when the price decreases, the amount of demand for products increases.

The configuration of the demand curve - its downward slope (negative slope to the abscissa) - can be explained using two effects: the income effect and the substitution effect.

Income effect shows how the real income of the consumer and his demand changes when the prices of goods change. For example, if the price of apples has decreased from 20 rubles. up to 10 rubles, then the buyer with his permanent income will be able to buy not 2 kg, but 9 kg of apples. And if he no longer wants to buy this product, then he can use the “released” money to buy an additional amount of another product. Lowering the price of a product made the consumer really richer and allowed to expand the volume of demand, which is the meaning of the income effect.

Substitution effect demonstrates the relationship between the relative prices of goods and the volume of consumer demand. A decrease in prices for apples, as in our example, with a constant level of prices for other goods means their relative reduction in price compared, for example, with pears, plums, etc. The consumer will start replacing relatively more expensive pears with the purchase of cheaper apples and will buy them not 2, but 4, 6 or 9 kg.

The income effect and the substitution effect do not act in isolation, but in interaction with each other, and in different situations a stronger influence of one of them may prevail.

Each product has its own demand curve. However, one should not think that it was given once and for all. Under the influence of a number of factors, the demand curve for a product may shift. In this regard, it is important to distinguish between the magnitude (volume) of demand and the demand itself.

Demand value can change if only the price of a given product changes, and all other factors affecting demand remain unchanged, i.e. the principle “ceteris paribus” applies. Graphically, the change in the amount of demand is depicted as a movement along the demand curve from one point to another. If there is a change in at least one of the factors contained in the demand function, except for the price that had previously remained unchanged (for example, the consumer's income, his taste, the number of consumers, prices for substitute or complementary goods), then the demand itself will change. The factors causing changes in demand are called non-price... Graphically, this situation is depicted by shifting the demand curve to the left up or to the right down. Consider the graphs in Fig. 2.2.

For example, an increase in consumer income will lead to the fact that at the same price R 0 he will be able to buy more goods, which will move the point A 0 exactly A 1, which means an increase in the number of purchases from Q 1 to Q 2. Similarly, the demand curve will shift to the right from the position D 0 in D 1 with an increase in the number of buyers in the market. The same will happen if tastes and preferences change (for example, in the summer the amount of purchased ice cream increases at a constant price). Obviously, when the values of the variables change in the opposite direction, the demand curve will shift to the left from the position D 0 v D 2.

However, it is also important to establish the scale of changes in the volumes of supply and demand when the price of a given product changes. Therefore, now we will find out why the curves D and S change in a certain way, and therefore why they intersect at one point or another. In order to understand this issue, we have to consider a new category - elasticity.

Price elasticity of demand - it is the degree of sensitivity of a change in demand for a product to a change in its price. It shows how much the demand will increase (decrease) when the price of a given product changes by one percent.

Mathematically, the elasticity of demand can be expressed as the following elasticity coefficient ( Ed):

where Ed- price elasticity of demand;

D P/P - relative (percentage) price change;

D Q/Q- relative (percentage) change in demand.

Elastic demand occurs when the amount of demand changes by a greater percentage than the price. For example, if the price of a car rises by 1%, the sales volume decreases by 2%. In this case

Ed= –2 % / 1 % = ?–2? = 2.

The value of the price elasticity of demand is always a negative number, because the numerator and denominator of a fraction always have different signs. Since economists are interested in the value of the elasticity coefficient, in order to avoid confusion in economic analysis, the minus sign is omitted; the absolute value of the indicator is taken.

Inelastic demand manifests itself if the purchasing power needs are not sensitive to price changes. For example, no matter how the prices for bread, salt, sugar rise or fall, the demand for these goods changes insignificantly.

Here are the options for the elasticity of demand :

1. Elastic demand takes place when the purchased quantity of goods increases by more than 1% for each percentage of price reduction (strong reaction), i.e. Ed> 1. Usually luxury goods, such as expensive cars, clothes of famous fashion designers, etc. have elastic demand. In the event of an increase in prices for these products, buyers refrain from shopping or switch to other similar products.

2. Inelastic demand takes place when the purchased quantity of a good increases by less than 1% for every percentage of the decrease in the price of this good (weak reaction), i.e. Ed < 1. Обычно неэластичный спрос существует на многие виды продуктов питания (хлеб, соль, сахар), на медикаменты, другие предметы первой необходимости.

3. Unit elasticity takes place when the purchased quantity of goods increases by 1% while the price also decreases by 1%, i.e. Ed = 1.

4. Absolutely elastic demand takes place when, at a constant price or its extremely insignificant changes, demand decreases or increases to the limit of purchasing power. In this case Ed=?. This happens in a competitive market under conditions of inflation: with a negligible decrease in prices or expecting an increase in prices, the consumer tries to spend his money in order to save it from depreciation by investing in material goods.

5. Absolutely inelastic demand takes place if any change in price does not entail any change in the quantity of products required, i.e. Ed= 0. This is possible, for example, in the implementation of essential drugs for a certain group of patients (insulin for diabetics).

The configuration of demand curves with different elasticities is shown in Fig. 2.3, 2.4.

Rice. 2.3. Types of demand elasticities

Rice. 2.4. Completely elastic
and absolutely inelastic demand

Calculating the coefficient Ed, one more problem should be solved: which of the two levels of price and quantity (initial or final) to use as a starting point. The fact is that the mathematical expressions for the elasticity index in these cases will be different.

In order to avoid uncertainty in the calculations, the average values of the price and quantity of products are usually used for the analyzed interval, i.e. half the sum of the initial and final values of the indicators. This formula is called formula central points:

where D is the change;

P 0, P 1 - respectively the initial and final prices of the goods;

Q 0, Q 1 - respectively the initial and final quantity of products.

The elasticity of demand is an extremely important metric for sellers who want to understand the impact of price changes on their revenue. When the elasticity of demand for a commodity is greater than 1, then a small decrease in price increases the cost of sales and total revenues. When the elasticity of demand is less than 1, then a small price decrease will reduce the cost of selling the product and reduce total revenues. On the contrary, an increase in price makes sense in case of inelastic demand, since in this case the cost of sales will increase. And with elastic demand, it makes no sense to raise the price, as the sales volume will decrease. The general rules for the influence of the price elasticity of demand on the seller's income (sales proceeds) are presented in Table. 2.2.

Table 2.2

Influence of the elasticity of demand on the proceeds from the sale of goods

From all of the above, we formulate basic rules for elasticity of demand:

1. The more substitutes a product has, the more elastic the demand, since changes in prices for substituted and substituted goods always make it possible to make a choice in favor of cheaper ones.

2. The more urgent the need satisfied by a product, the lower the elasticity of demand for this product. Thus, the demand for bread is less elastic than the demand for laundry services.

3. The greater the share of costs for a product in consumer spending, the higher the elasticity of demand. For example, an increase in the price of toothpaste, which is purchased in relatively small quantities and is inexpensive, will not change demand. At the same time, an increase in prices for basic food products, the costs of which are quite high in the consumer's budget, will lead to a sharp decline in demand.

4. The more limited access to a product, the lower the elasticity of demand for this product. This is a situation of scarcity. Therefore, monopoly firms are interested in creating a deficit for their goods, as this makes it possible to raise the price.

5. The higher the degree of satisfaction of needs, the less elastic demand. For example, if each family member has a car, then the purchase of another one is possible only with a significant price reduction.

6. Demand becomes more elastic over time. This is due to the fact that the consumer needs time to abandon his usual product and switch to a new one.

What is the practical meaning of the demand curve? Why would an entrepreneur, for example, know it? The point is that this curve expresses the price demand ... Bid price Is the maximum price that the consumer agrees to pay when purchasing this product. The demand price is not identical to the market price, that is, the price of a particular purchase, which is also called the market equilibrium price. It is limited to the buyer's income and remains fixed, since he cannot pay more for this product.