BBA 1st Semester Principles of Economics Notes

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BBA 1st Semester Principles of Economics Notes

 

BBA 1st Semester Principles of Economics Notes:- All BBA 1st semester students’s we are provide the study material and question paper of BBA . and in this article you can find few year question paper. BBA Principles of Economic Previous Year Question Paper 2020 today our team presented BBA Principles of Economic Supply and demand how markets work, Market Completion, Prefect and Outer-wise, Change in Quantity Demanded, Law of Supply, year question paper for you practise. and special links related to the BBA Economic and all subject question paper and study material. we provided mock paper, question paper, simple paper, unsold paper last five year question paper.

 

SUPPLY AND DEMAND HOW MARKETS WORK

The Market Forces of Supply and Demand

• Supply and demand are the two words that economists use most often.
• Supply and demand are the forces that make market economies work.
• Modern microeconomics is about supply, demand, and market equilibrium.
• A market is a group of buyers and sellers of a particular good or service.
• The terms supply and demand refer to the behavior of people . . . as they interact with one another in markets.

Markets and competition

• A competitive market is a market in which there are many buyers and sellers so that each has a negligible impact on the market price.

• Perfect competition
• Products are the same
• Numerous buyers and sellers so that each has no influence over price
• Buyers and sellers are price takers
• Monopoly
• One seller, and seller controls price

Competition: Perfect and Otherwise

• Oligopoly
• Few sellers
• Not always aggressive competition
• Monopolistic competition
• Many sellers
• Slightly differentiated products
• Each seller may set price for its own product

Competition: Perfect and Otherwise Demand Principles of Economice

• Quantity demanded is the amount of a good that buyers are willing and able to purchase.
• Law of Demand
• The law of demand states that, other things equal, the quantity demanded of a good falls when the price of the good rises.

Demand curve: relationship between price and quantity demanded

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

 

• Demand schedule
• The demand schedule is a table that shows the relationship between the price of the good and
the quantity demanded.

 

Catherine’s Demand Schedule

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

Market Demand versus Individual Demand

• Market demand refers to the sum of all individual demands for a particular good or service.
• Graphically, individual demand curves are summed horizontally to obtain the market demand curve.

Shifts in the Demand Curve

• Change in Quantity Demanded
• Movement along the demand curve.
• Caused by a change in the price of the product.

Changes in Quantity Demanded

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

Shifts in the Demand Curve

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

• Consumer income
• Prices of related goods
• Tastes
• Expectations
• Number of buyers

Shifts in the Demand Curve

• Change in Quantity Demand
• A shift in the demand curve, either to the left or right.
• Caused by any change that alters the quantity demanded at every price.
Figure 3 Shifts in the Demand Curve

Shifts in the Demand Curve

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

Consumer Income Normal

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

Shifts in the Demand Curve
• Prices of Related Goods/
• When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes.
• When a fall in the price of one good increases the demand for another good, the two goods are called complements.

Variables That Influence Buyers

BBA 1st Semester Principles of Economics Notes :-

• Quantity supplied is the amount of a good that sellers are willing and able to sell.
• Law of Supply
• The law of supply states that, other things equal, the quantity supplied of a good rises when the price of the good rises.
The Supply Curve: The Relationship between Price and Quantity Supplied
• Supply Schedule
• The supply schedule is a table that shows the relationship between the price of the good and the quantity supplied.
The Supply Curve: The Relationship between Price and Quantity Supplied
• Supply Curve
• The supply curve is the graph of the relationship between the price of a good and the quantity supplied.

Market Supply versus Individual Supply
• Market supply refers to the sum of all individual supplies for all sellers of a particular good or service.
• Graphically, individual supply curves are summed horizontally to obtain the market supply curve.

Shifts in the Supply Curve
• Input prices
• Technology
• Expectations
• Number of sellers

Shifts in the Supply Curve Principles of Economics Notes

• Change in Quantity Supplied
• Movement along the supply curve.
• Caused by a change in anything that alters the quantity supplied at each price.
• Change in Supply
• A shift in the supply curve, either to the left or right.
• Caused by a change in a determinant other than price.

SUPPLY AND DEMAND TOGETHER

• Equilibrium refers to a situation in which the price has reached the level where quantity supplied equals quantity demanded.
• Equilibrium Price
• The price that balances quantity supplied and quantity demanded.
• On a graph, it is the price at which the supply and demand curves intersect.
• Equilibrium Quantity
• The quantity supplied and the quantity demanded at the equilibrium price.
• On a graph it is the quantity at which the supply and demand curves intersect.

 

Markets Not in Equilibrium

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

 

• Surplus
• When price > equilibrium price, then quantity
supplied > quantity demanded.
• There is excess supply or a surplus.
• Suppliers will lower the price to increase sales, thereby moving toward equilibrium.

• Shortage
• When price < equilibrium price, then quantity
demanded > the quantity supplied.
• There is excess demand or a shortage.
• Suppliers will raise the price due to too many buyers chasing too few goods, thereby moving toward equilibrium.

Shortage Equilibrium

• Law of supply and demand
• The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance.
Three Steps to Analyzing Changes in Equilibrium
• Decide whether the event shifts the supply or demand curve (or both).
• Decide whether the curve(s) shift(s) to the left or to the right.
• Use the supply-and-demand diagram to see how the shift affects equilibrium price and quantity.

Three Steps to Analyzing Changes in Equilibrium
• Shifts in Curves versus Movements along Curves.
• A shift in the supply curve is called a change in supply.
• A movement along a fixed supply curve is called a change in quantity supplied.
• A shift in the demand curve is called a change in demand.
• A movement along a fixed demand curve is called a change in quantity demanded.

How a Decrease in Supply Affects Equilibrium

BBA Principles of Economics Notes Introduction

What Happens to Price and Quantity
When Supply or Demand Shifts

BBA 1st Semester Principles of Economics Notes
BBA 1st Semester Principles of Economics Notes

• Economists use the model of supply and demand to analyze competitive markets.
• In a competitive market, there are many buyers and sellers, each of whom has little
or no influence on the market price.
• The demand curve shows how the quantity of a good depends upon the price.
• According to the law of demand, as the price of a good falls, the quantity demanded rises. Therefore, the demand curve slopes downward.
• In addition to price, other determinants of how much consumers want to buy include income, the prices of complements and substitutes, tastes, expectations, and the number of buyers.
• If one of these factors changes, the demand curveshifts.
• The supply curve shows how the quantity of a good supplied depends upon the price.
• According to the law of supply, as the price of a good rises, the quantity supplied rises.

Therefore, the supply curve slopes upward.

• In addition to price, other determinants of how much producers want to sell include input prices, technology, expectations, and the number of sellers.
• If one of these factors changes, the supply curve shifts.
• Market equilibrium is determined by the intersection of the supply and demand curves.
• At the equilibrium price, the quantity demanded equals the quantity supplied.
• The behavior of buyers and sellers naturally drives markets toward their equilibrium.

• To analyze how any event influences a market, we use the supply-and-demand diagram to examine how the even affects the equilibrium price and quantity.
• In market economies, prices are the signals that guide economic decisions and thereby allocate resources.

 


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