【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
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.
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
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
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
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.
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
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)
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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DSE Econ 文章系列
Microeconomics
Macroeconomics
經濟表現的量度 Measure of economic performance
貨幣與銀行 Money and Banking
宏觀經濟問題和政策 Macroeconomic Problems and policies
國際貿易和金融 International Trade and Finance
DSE Econ題型技巧 文章系列
Change in demand and supply at the same time