【DSE Econ】Demand and Supply 最齊精讀 | 囊括所有背書內容【懶人包】

Demand and Supply dse

需求與供應是現代經濟學中最基本且重要的概念之一。需求代表了消費者對商品或服務的需要，而供應則代表了生產商或供應商提供商品或服務的能力。需求與供應的關係直接影響著市場價格和交易量，對於企業經營和國家經濟發展都有著重要的影響。

在現代經濟體系中，需求和供應的變化受到許多因素的影響，包括政府政策、社會和文化變遷、科技進步等等。對於企業和政府而言，了解和掌握需求和供應的變化趨勢，是制定有效策略和做出明智決策的基礎。

本文將探討需求與供應的基本概念和相互關係，分析對需求和供應的影響因素，以及如何透過市場調研和分析來了解需求和供應的變化趨勢。我們希望通過這篇文章，讓讀者對需求與供應有更深入的理解，並對經濟學和商業實踐有所啟發。

The law of demand

When the price of a good increases, its quantity demanded will decrease, and vice versa, other factors being constant.

Moving along the same demand curve→ changes in price.

Shifting of the whole demand curve → changes in other factors other than price.

Other factors may include:

-Weather 

-Income

-Government policies

-Taste and preference of consumers

-Buyers’ expectation of future price 

–If buyers expect the price of a good would rise in the future, their current demand for the good will increase, and vice versa. (將來買會蝕，所以而家買多D)

-Number of consumers

-Demand-side relationship of goods

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Shortage (excess demand)

A situation where the quantity demanded is greater than the quantity supplied at a particular price which is set below the equilibrium level.

Surplus (excess supply)

A situation where the quantity supplied is greater than the quantity demanded at a particular price which is set above the equilibrium price.

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Relationships between two goods (Demand-side)

Substitutes (competitive demand)

-two goods that satisfy the same want of consumers. 

-When the price of one good increases (can be caused by an increase in demand or a decrease in supply), the demand for another good will increase, and vice versa. (買一個唔買另一個)

-Example: physical books vs E-books 

-如果physical books貴左(P↑)，D人會買小左physical books，轉去買E-books，E-books嘅demand↑。

Complements (joint demand)

-two goods are used together to satisfy one want.

-When the price of one good increases (can be caused by an increase in demand or a decrease in supply), the demand for its complement will drop, and vice versa. (齊上齊落，一齊用)

-Example: CDs and CDs player

-如果CDs貴左(P↑)，D人會買小左CDs，自然對CDs player嘅demand都會↓。

Derived demand

-A good is defined as the derived demand of another good when it is used to make/produce that good i.e. the factors of production of another good.

-When the demand for a good increases, the demand for its derived demand (factors of production) will increase, and vice versa. 

-Example: Coffee and coffee beans, where coffee = goods produced/output, coffee beans = derived demand/factors of production

-如果coffee嘅demand↑，對coffee beans嘅demand自然都會↑，因為coffee要用coffee beans整。

Derived demand vs competitive supply

前者係整一樣嘢會需要另一樣嘢which is要整嘅果樣嘢嘅factors of production，而後者就係兩樣嘢需要相同/相似嘅factors of production。

Superior (normal) goods and inferior goods

-When people’s income increases,

the demand for superior/normal goods will increase while the demand for inferior goods will decrease.

-To sum up, the demand for superior/normal goods is positively related to people’s income while the demand for inferior goods is negatively related to people’s income.

Summary

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The law of supply

When the price of a good increases, its quantity supplied will increase, and vice versa, other factors being constant.

Moving along the supply curve → changes in price.

Shifting of the whole supply curve → changes in other factors other than price.

Other factors may include:

-Cost of production (technology level/input prices/tax/subsidy)

-Sellers’ expectation of future price 

–If sellers expect the price of a good would rise in the future, the current supply of the good will drop, and vice versa. (將來賣會賺D，所以而家整少D)

-Number of sellers

-Weather 

-Supply-side relationship of goods

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Relationship between two goods (supply-side)

Joint supply

-When the production of one good generates another good, these two goods are in joint supply. (整一樣嘢嘅同時會整埋第二樣嘢，例如殺隻牛去攞牛肉，會同時有埋牛皮)

-When the price of a good increases (can be caused by an increase in demand or a decrease in supply), the supply of the joint supply of it will increase, and vice versa.

-Example: cow and leather

Competitive supply

-When two goods require the same/similar factors of production, these two goods are in competitive supply. (整一個唔整另一個)

-When the price of a good increases (can be caused by an increase in demand or a decrease in supply), the competitive supply of it will drop, and vice versa.

-Example: adult’s wear vs children’s wear

-如果店家發現整adult’s wear會賺多D錢，佢地就會整多D，變相整少左children’s wear，因為兩者都需要相同/相似嘅factors of production

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Elasticity of demand

Measure the responsiveness of the quantity demanded of a good to a change in its price.

買家對於價格改變嘅反應程度，越大越elastic, and vice versa.

Equation

% change in Qd /%change in P

      OR

((new Qd – old Qd) / 中間 ) / ((new P – old P) / 中間))

Types of demand in different elasticity

Elsatic demand

Percentage change in quantity (demanded) is greater than the percentage change in price.

Inelastic demand (0＜Ed＜1)

Percentage change in quantity (demanded) is smaller than the percentage change in price.

Unitarily elastic demand (Ed = 1)

Percentage change in quantity (demanded) equals the percentage change in price.

Perfectly elastic demand (Ed = ∞)

Any changes in price can cause an infinity change in quantity demanded

Perfectly inelastic demand (Ed = 0)

Any changes in price will not cause any changes in the quantity demanded I.e. Qd remains the same at any price.

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Relationship between elasticity of demand and total expenditure/revenue

Point to note

If only a change of price is stated in the question, the effect on total expenditure/revenue should be uncertain as we don’t know whether the demand is elastic or inelastic.

Factors affecting the elasticity of demand

-Close substitutes (more close substitutes→tend to be elastic)

-Necessity (Eg. 食煙) (higher degree of necessity→tend to be inelastic)

-Habit forming (consumption habit formed→tend to be inelastic)

-Proportion of expenditure to income (higher proportion→tend to be elastic)

-Number of uses (more uses→tend to be elastic)

-Time available to adjust consumption (more time →tend to be elastic)

-Durability (more durable →tend to be elastic)

-Common sense

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Elasticity of supply

Measure the responsiveness of the quantity supplied of a good to a change in price.

價格改變之後，增加/減少一樣嘢嘅supply嘅速度, 越快越elastic, and vice versa.

Equation

% change in Qs /%change in P

      OR

((new Qs – old Qs) / 中間 ) / ((new P – old P) / 中間))

Types of supply in different elasticity

-Elastic supply (Es＞1)

-Inelastic supply (0＜Es＜1)

-Unitarily elastic supply (Es = 1) (由origin出發，45度嘅直線)

-Perfectly elastic supply (Es = ∞)

-Perfectly inelastic supply (Es = 0)

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Factors affecting the elasticity of supply

-Available amount of goods (supply of some goods are perfectly inelastic in nature eg. Hospital, housing, tunnels, infrastructure)

-Ease of adjusting factors of production (easier→tend to be elastic)

-Factor mobility (more mobile →tend to be elastic)

-Reserve capacity (more reserve →tend to be elastic)

-Adjustment time (more time allowed →tend to be elastic)

-Ease of entry (easier →tend to be elastic)

-Common sense

Reminder on drawing demand-supply diagram

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