Question

Minimum 300 words respond to the following "what is the difference between quantity demanded and demand as well as quantity supplied and supply, and give a brief account of those "factors" which can shift the demand curve?"

Answer 1

Quantity demanded and demand:

The amount of good which we buy at a given price is known as the quantity demanded for that good Whenp of a commodity is changed keeping other things constant then there's a change in quantity demanded. A change in quantity demanded occurs on the same demand curve which is often termed as movement along demand curve occuring due to change in price .Higher prices leads to lower quantity demanded of a good and vice versa. Only factor which affects quantity demanded is price of the given commodity.

Demand refers to willingness of a consumer to buy a particular good having ability to pay for it. When other factors change at a given price then a change in demand occurs which shifts the demand curve either towards right or left . When demand increases, demand curve shifts rightward and when demand decreases demand curve shifts leftwards.

Quantity Supplied and supply:

The amount of goods that a supplier is ready to supply at given price in given time is known as quantity supplied. When price of a commodity changes keeping other things constant, then quantity supplied changes. Price and quantity supplied have a direct relationship. When price increases quantity supplied also increases and vice versa. This causes a movement along supply curve .

The willingness of suppliers to supply a particular good in the market is known as supply. When price is unchanged and change in other factors occurs, it causes a change in supply. An increase in supply shift it's curve to right and vice versa. These other factors include:

• Technology used
• Productivity
• Input cost
• Change in number of sellers
• Government regulation (taxes etc)
• Expectations of suppliers

Factors which shift demand curve

1. price of substitute goods
2. Price of complimentary goods
3. Buyers expectations
4. Taste and preferences
5. income of the consumer

Price of substitute good: the goods which can be used interchangeably are substitute goods. For example: tea and coffee. If the price of substitute increases then demand for substitute decreases and demand for othe good increases and vuce versa.

Price of complementary goods: goods which are used together are complementary goods. For example tea and sugar. If price of one good rises the demand for it falls which in turn reduce the demand for other and if price of one falls demand for it rises which raises the demand for other also.

Buyer's expectations: if the buyers expect that there will be price rise in future then they will increase the demand fir good today and if the prices are to be decreased as per buyer's expectations then demand for the good today will also decrease.

Taste and preferences: when buyers have a positive taste or preference towards a good it raises it's demand while a negative taste reduces it's demand.

Income of the consumer: if the consumer income increases he'll demand more of a good and if consumer income decreases he'll demand less of a good. (May differ according to type of good).