CHAPTER 9. DEMAND and sUPPly MODELLING
CHAPTER 9: DEMAND and SUPPLY MODELLING
1 DEMAND CURVE In general, the demand for a product is dependent upon the specifc unit price that is charged a The selling price falls then the demand will rise a The selling price rises then the demand will fall An inverse relationship between demand and selling price This type of relationship can be represented by
[1] DEMAND CURVE ◼ In general, the demand for a product is dependent upon the specifc unit price that is charged. ❑ The selling price falls then the demand will rise ; ❑ The selling price rises then the demand will fall; ◼ An inverse relationship between demand and selling price. ◼ This type of relationship can be represented by:
a gd= f(p) gd stands for the quantity demanded p stands for the unit price fo is notational shorthand for saying 'depends upon EXample: Cycle Safety-HeImet a a company manufactures and sells a particular type of bicycle safety-helmet. The demand for the company,s product is given by qd=900-30p (9.2) where p is in fs and gd is in units of output per time period
❑ qd = f(p) ◼ qd stands for the quantity demanded ; ◼ p stands for the unit price ; ◼ f() is notational shorthand for saying 'depends upon ‘ ◼ Example : Cycle Safety-Helmet ❑ A company manufactures and sells a particular type of bicycle safety-helmet. The demand for the company's product is given by : ◼ qd = 900 - 30p — — ( 9.2 ) ◼ where p is in £'s and qd is in units of output per time period
Diagram 9.1 Demand curve 1000 00 30 0 0 35 p· price per unit
o How should we define the two axes u In terms of the x-axis, what range is appropriate a How should the x-axis range be calibrated qd 0 0 750 10 15 450 300 300 400 25 500
❑ How should we define the two axes ? ❑ In terms of the x-axis , what range is appropriate ? ❑ How should the x-axis range be calibrated ? p qd qs 0 900 0 5 750 100 10 600 200 15 450 300 20 300 400 25 150 500 30 0 600