Market supply and demand in brief. Supply and demand. Laws and schedules. Elasticity in supply directly depends on its factors

Price, supply and demand.

Equilibrium in the market.

Demand and factors determining it.

The action of the market is determined by the functioning of the market mechanism. The main elements of the market mechanism are: demand, supply, market price and competition.

Demand is the desire and ability of consumers to buy a certain volume of goods.

The concept of demand is dual, since on the one hand there are various desires, and on the other hand there are opportunities provided by money. Hence the demand qualitative and quantitative side.

Quality side demand characterizes the dependence of demand on various needs and is influenced by factors such as climatic conditions, the existing social, national, religious environment and the general economic level of development of society.

Quantitative side demand is always connected with money, that is, with the payment capabilities of the population. Demand supported by the paying ability of the population is called effective demand .

The quantity of demand is influenced by the following factors: they can be price and non-price. The price factor is the price of the product. Non-price factors - consumer income, types and preferences of consumers, availability of substitute goods (substitutes), availability of complementary goods (compliment), number of buyers in a given market, buyer expectations (inflationary and scarcity).

Thus, demand is a multifactorial phenomenon, which is always supported by money. In the absence of payment opportunities, demand does not manifest itself as an element of the market mechanism.

There is a distinction between individual and market demand.

Individual demand – the demand of an individual buyer for a separate, specific product.

Market demand – the total demand of all buyers for a given product at a certain price.

Individual and market demand have an inverse relationship with price. There is a distinction between the dependence of demand on price and non-price factors.

The dependence of demand on price is described by the demand function.

Q d = f(P), Where Q d– volume of demand, P– price, f– demand function.

The demand function shows the quantity of goods that consumers are willing to buy at a given price level. The quantity of a good that consumers are willing to buy at a given price level is called the quantity demanded.

The demand curve is sloping towards the curve D and shows the inverse relationship between the volume of demand d from the price. In other words, the higher the price, the lower the quantity demanded, but as the price decreases, the quantity demanded increases. ( Rice. 1)

Rice. 1

The relationship in which the volume of demand (purchases) is inversely proportional to the level is called the law of demand. According to the law of demand, consumers, other things being equal, will buy more goods the lower their price. In this case, the relationship between price and volume, demand is direct, that is, as prices rise, the volume of demand also increases from Q 1 before Q 2 (Rice. 2)

Rice. 2

This situation occurs in three cases:

products are designed for rich people, for whom price does not matter much;

buyers judge a product by its price (the higher the price, the better the quality of the product);

the product is a Giffen good, that is, there is a single good that the population can buy at its extremely low income.

In business practice, the usual curve prevails, which is associated with the rational, effective behavior of the consumer, his full awareness of the price and nature of the product being purchased. When the demand curve changes, a graphical change in the demand curve occurs. It is necessary to distinguish between movement along the demand curve and movements of the demand curve itself. ( Rice. 3)

Movement along the demand curve means a change in the magnitude (volume) of demand caused by a change in the price factor. The action of non-price factors, that is, all the others, leads to a change in demand and a movement of the demand curve upward or downward.

For example, during the hot summer months, the demand for soft drinks and ice cream increases. In this case the curve D will shift to a new position, that is, to a curve D 1 , that is, to the right. And in the winter months, demand decreases, then the curve becomes D 2 . and if the average income of buyers increases, then, other things being equal, the curve D move to the right and to the same price level P 1 will correspond to the increased level Q 1 , as shown in the graph (P is. 3)

Rice. 3

Demand is characterized by the demand price. This is the maximum price that a consumer can pay when purchasing a given quantity of goods. It is determined by the amount of consumer income and remains fixed, since the buyer can no longer pay for the product, that is, the higher the demand price, the fewer goods will be sold. Thus, demand is one of the necessary elements of the market mechanism that characterizes human behavior.

Proposals and factors influencing it.

The second essential element of the market mechanism is supply. This is the desire and ability of producers (sellers) to supply the market with a certain amount of goods and services at a given price. Supply is the result of production and reflects the desires and capabilities of the manufacturer to produce and sell their goods.

Supply quantity - this is the maximum quantity of goods and services that producers (sellers) are able and willing to sell at a certain price in a certain place and at a certain time. The quantity supplied must always be determined over a specific period of time.

Supply factors can be price or non-price.

Price factors – the price of the product itself and the price of the resources used in the production of the product.

Non-price factors – this is the level of technology, production costs, the company’s goals, the amount of tax subsidies, prices for related goods, the expectations of producers, the number of producers of the product. Thus, supply is multifactorial; the factors that determine the amount of supply are also the motivation for entrepreneurial activity.

There is a distinction between the dependence of supply on price and non-price factors. This dependence is described by the function Q s = f (P) , Where Q s– volume of supply, P- price, f – function.

The relationship between supply and price is expressed in law of supply, the essence of which is as follows: the quantity of supply, other things being equal, changes in direct proportion to the change in price. The direct response of supply to price is explained by the fact that production responds quickly enough to any changes occurring in the market. When prices rise, commodity producers use reserve capacity or introduce new ones, which leads to an increase in supply. In addition, the presence of upward trends in prices attracts other producers to this industry, which further increases production and supply. It should be noted that in the short term, an increase in supply does not always immediately follow an increase in price. Everything depends on the available production reserves (availability of equipment, labor, etc.) since the expansion of capacity and the transfer of capital from other industries usually cannot be carried out in a short time. In the long run, an increase in supply almost always leads to an increase in price.

Supply curve ( Rice. 4)

Rice. 4

The supply curve determines the relationship between supply volume and price and shows the desire of producers to sell more goods at a high price.

The most important factor influencing the supply price is the price of the product. The income of sellers and producers depends on the level of market prices. Thus, the higher the price of a given product, the greater the supply and vice versa.

Offer price – the minimum price at which sellers agree to supply a given product to the market. The lower the supply price, the less goods will enter the market. At the same time, the number of producers cannot be infinitely large, since the market is saturated with goods.

The main reason for the reduction in supply is limited resources, that is, lack of raw materials, etc. Therefore, the market supply curve is the supply price curve, which reflects the value of production costs. The larger the production volume, the higher its costs. Thus, the supply curve shows more favorable conditions for the production and sale of products.

Changes to offers.

When a product changes, the corresponding point in the market situation moves along the supply curve, that is, the quantity of supply changes. Non-price factors influence changes in all functions of supply. ( Rice. 5)

As supply increases, the curve S 1 will move to a new position S 2 – that is, to the right, and when decreasing to the left - S 3 .

Demand(D, demand) is the desire and ability of buyers (consumers) to purchase goods or services. Distinguish between individual and market. The demand of an individual consumer in the market is called individual. Market demand is the sum of the individual demands of all consumers of a given product. Quantity of demand shows the relationship between a given price and the quantity of the product being purchased. The relationship between the concepts of “demand” and “quantity of demand” is clearly shown by the graph of the demand curve (Fig. 3-2).

If we plot all possible quantities of the purchased product along the x-axis, and all possible price options for it along the ordinate axis, we obtain a demand curve - D0, as a set of points that expresses all possible combinations of prices and quantities of the purchased product in a given period. Each point on the demand curve shows a certain quantity demanded, that is, the amount of a good that buyers are willing and able to buy at a given price. All other things being equal, a decrease in price causes an increase in the quantity demanded of a product, and vice versa. Law of Demand expresses the inverse relationship between the price of a product and the quantity demanded for it.

The relationship between the quantity demanded of a good and its price can be explained by the income effect and the substitution effect. Income effect consists in the fact that when the price decreases (which is equivalent to an increase in income), the product becomes cheaper relative to the total amount of income and therefore it can be bought in larger quantities without denying oneself the purchase of other goods. Substitution effect means that when the price decreases, there is an incentive to buy this product instead of similar others, which have become relatively more expensive (if beef has fallen in price, then the demand for lamb, pork, fish, poultry will decrease, since more beef will be purchased). The income effect and the substitution effect determine the downward sloping nature of the demand curve, i.e., as the price decreases, the quantity demanded increases.

In addition to the price of a given product, demand is affected by others, non-price factors, which characterize the consumers of this product. Non-price factors of demand include consumer tastes and preferences, the number of consumers in the market, income, prices for other goods, consumer expectations. Non-price factors change demand, increasing or decreasing it. This means that at the same price of a product, buyers are willing to buy more or less of it, or that they are willing to buy the same quantity of a product at a higher (lower) price. The change in demand on the graph is expressed as shift demand curve: with increasing demand - up and to the right, from D 0 to D 1 , and when demand decreases, down and to the left, from D 0 to D 2 (Fig. 3-2).

Rice. 3-2. Demand curves

Let us consider in more detail the influence of consumer income and prices of other goods on demand. Changes in consumer income affect demand, but the direction of change depends on the product category. In highly developed countries there are normal goods, consumed by the bulk of the population, and low category goods, intended for the poor and low-income.

The relationship between changes in demand for goods of normal quality (for example, a new car, vacation expenses) and changes in income is direct, but in the case of goods of the lowest category it is inverse. As income increases, demand for them decreases, and vice versa.

Prices for other goods, influencing consumer behavior, also change demand. The direction of change depends on the type of product, whether it is complementary or interchangeable. Complementary (related) goods - These are goods that are consumed together. The relationship between the demand for a given product and the price of the associated product is inverse. If, for example, the prices of VCRs rise sharply, then the demand for video cassettes will fall.

Fungible goods can be used in place of one another. The relationship between a change in the price of an interchangeable product and a change in demand for this product is direct. If the price of poultry falls, then, other things being equal, the demand for beef will decrease.

Supply, factors influencing it. Law of supply.

Offer(S, supply) shows the desire and ability of producers-sellers to supply goods or services to the market at any of the possible prices in a given period of time. Just as in the case of demand, it is necessary to distinguish between the concepts of “individual supply” and “market supply”, “supply” and “quantity of supply”. Supply quantity shows the relationship between a given price and a given quantity supplied.

If the quantity of demand is inversely related to the yen of a product, then there is a direct relationship between the price and the quantity of supply: if the price rises, then, other things being equal, more of this product will enter the market, since it is profitable for the manufacturer to increase its production and vice versa. Law of supply expresses the direct relationship between price and quantity supplied of a product.

The supply curve S 0 on the graph (Fig. 3-3) shows all possible combinations of prices and quantities of goods supplied, all other things being equal. According to the law of supply, it has an ascending character.

Rice. 3-3. Supply curves

In addition to the price of a given product, the supply is influenced by the following non-price factors:

1) prices for resources, the relationship between prices for resources and supply is direct. A decrease in prices for resources will reduce the cost of producing a unit of goods (average costs), so for producers the supply of this product to the market will become profitable and supply will increase. Rising prices for resources, increasing production costs, reduces the supply of goods;

2) production technology. The introduction of advanced technologies, reducing average production costs, increases supply;

3) taxes and subsidies. High taxes reduce supply, and subsidies and preferential loans, if used effectively, can stimulate the growth of production and supply;

4) number of producers. There is a direct relationship between the number of sellers and supply in the market;

5) price expectations of sellers also influence supply. If prices for a given product are expected to increase, then producers will hold it at the moment and vice versa. The change in supply under the influence of non-price factors, among which the change in average production costs (resource prices, economics of production, taxes and benefits) is of decisive importance, is shown in Fig. 3-3. An increase in supply leads to a downward shift to the left of the supply curve from S 0 to S 1 and a decrease in supply leads to a shift to the right, upward from S 0 to S 2 .

Elasticity of supply and demand.

The degree of sensitivity of demand (or supply) for a product to changes in its price is called elasticity of demand(offers). It varies from product to product and can be measured using the elasticity coefficient.

Elasticity coefficient(E - elasticity) shows by what percentage the quantity demanded (or supplied) for a given product changes when its price changes by one percent.

If this ratio is greater than one, demand is considered elastic, if less than one, demand is considered inelastic. With unit elasticity of demand, Ed is equal to one. If a change in price does not change the quantity demanded at all, then completely inelastic demand occurs. When, at a constant price, the quantity demanded constantly increases, perfect elasticity of demand is observed.

Different options for elasticity of demand can be represented in traffic (Fig. 3-4). Curve A shows inelastic demand, curve B shows unit elasticity, and curve C shows elastic demand. The elastic demand curve C is flatter than the inelastic demand line A. Moreover, any demand is more elastic in the area of high prices and low volumes of demand and inelastic in the area of low prices and large possible sales. (The horizontal straight line N represents perfectly elastic demand, and the vertical straight line M represents perfectly inelastic demand).

Rice. 3-4. Elasticity of demand

An example of inelastic (weakly elastic) demand is the demand for medicines, drugs, and many essential goods (for example, bread): no matter how the price of these goods changes, the demand for them changes little or does not change at all. Therefore, an increase in price leads to an increase in gross revenue - the product of price and sales volume, and vice versa (Fig. 3-5, A).

With unit elasticity of demand, a change in price does not lead to a change in revenue, since the decrease in price is compensated by the same increase in the sales volume of the product (Fig. 3-5, B). If the demand for a given product is elastic, that is, a small decrease in the price of a product causes a larger increase in the quantity demanded, then the firm will not lose from such a decrease and will ultimately receive more income. Consequently, with elastic demand, price and revenue change in opposite directions, and with inelastic demand - in the same direction (3-5, C).

The concept of elasticity is also applicable to the study of product supply. Changes in supply are determined by difficulties in redistributing resources between industries, which is associated with the time factor: supply is less elastic in the short term and more elastic over a long period, when it is possible to adapt to the changed market situation.

Rice. 3-5. The impact of demand elasticity on total revenue

The elasticity of demand for goods is important for practice; this issue is carefully studied and taken into account in the market strategy of any company.

Demand - this is the quantity of a product that buyers want and can purchase over a certain period of time at all possible prices for this product.

In economics there is a so-called law of demand the essence of which can be expressed as follows: all other things being equal, the lower the price of this product, the higher the quantity of demand for a product, and vice versa, the higher the price, the lower the quantity of demand for the product. The operation of the law of demand is explained by the existence of the income effect and the substitution effect. The income effect is expressed in the fact that when the price of a good decreases, the consumer feels richer and wants to purchase more of the good. The substitution effect is that when the price of a product decreases, the consumer tends to replace this cheaper product with others whose prices have not changed.

The concept of “demand” reflects not only the desire, but also the ability to purchase a product, i.e., as a rule, it implies not just a need for a product, but an effective demand for this product. If there is a need for a product, but there is no opportunity to purchase the product, then there is no demand (effective demand) for this product. For example, a certain consumer wants to buy a car for 1 million rubles, but he does not have that amount. In this case, we have the desire, but do not have the ability to pay, so there is no demand for the car from this consumer.

The law of demand is limited in the following cases:

in case of rush demand caused by buyers’ expectation of price increases;
for some rare and expensive goods, the purchase of which remains a means of accumulation (gold, silver, precious stones, antiques, etc.);
when demand shifts to newer and better goods (for example, when demand shifts from typewriters to home computers, reducing the price of typewriters will not lead to an increase in demand for them).

A change in the quantity of a good that buyers are willing and able to purchase depending on a change in the price of that good is called changes in the quantity of demand. In Fig. Figure 4.1 graphically shows the relationship between the price of a vacuum cleaner and the amount of demand for it. A change in quantity demanded is a movement along the demand curve.

Rice. 4.1.

D (English) demand ) - demand; R (English) price ) – price; Q (English) Quantity ) – quantity of demand

If the price of a vacuum cleaner decreases from 30 to 20 thousand rubles, then the quantity of demand for it will increase from 200 to 400 units. daily, and vice versa.

However, price is not the only factor influencing the desire and readiness of consumers to purchase a product. Changes caused by all factors other than price are called changes in demand. All these and other factors (so-called non-price) influence both increasing and decreasing demand.

Non-price factors include changes:

in the income of the population. If the income of the population grows, then buyers have a desire to purchase more goods, regardless of their prices. For example, the demand for high-quality clothing and footwear, durable goods, real estate, etc. is growing;
in the population structure. For example, an increase in the birth rate leads to an increase in demand for children's products; the aging population entails an increase in demand for medicines and care items for the elderly;
prices for other goods. For example, an increase in prices for beef can lead to an increase in demand for a substitute product - poultry, etc.;
consumer tastes, fashion, habits, etc. and other factors not related to price;
in customer expectations. So, if they expect that the price of a product will soon decrease, then at the moment they can reduce their demand.

In Fig. 4.2, the influence of non-price factors on demand can be depicted as a shift of the demand curve to the right (increase in demand) or to the left (decrease in demand).

Rice. 4.2.

D, D1, D2 – surveys, respectively, initial, increased, decreased

What is an offer?

Offer - This is the quantity of a product that sellers are willing and able to offer in a certain period of time at all possible prices for this product.

Law of supply is that, other things being equal, the higher the price of this product, the higher the price of this product, the higher the quantity of goods offered by sellers, and vice versa, the lower the price, the lower the quantity of its supply.

In Fig. Figure 4.3 graphically shows the relationship between the price of a product and the quantity that sellers are willing to offer for sale. Movement along the supply curve is called a change in quantity supplied. If the price of a vacuum cleaner increases from 20 to 30 thousand rubles, then the number of vacuum cleaners offered will increase from 200 to 400 units. daily, and vice versa.

Rice. 4.3.

S (English) supply ) - offer; R – price; Q – quantity of supply

In addition to price, supply is also influenced by non-price factors, among which the following stand out:

change in firm costs. Reduced costs as a result, for example, of technical innovations or lower prices for raw materials lead to an increase in supply. On the contrary, rising costs as a result of rising prices for raw materials or the introduction of additional taxes on the manufacturer causes a decrease in supply;
tax reduction for manufacturers. Helps stimulate supply growth; on the contrary, reducing government subsidies can lead to a reduction in supply;
increase (reduction ) the number of firms in the industry. Leads to an increase (decrease) in supply.

In Fig. 4.4 the influence of non-price factors on supply is depicted as a shift of the supply curve to the right (increase in supply) or left (decrease in supply). In this case we talk about a change in supply.

Rice. 4.4.

S, S1, S2 – supply, respectively, initial, increased, decreased

INTRODUCTION

In a market economy, products are bought and sold. Commodity circulation and, accordingly, the market are always represented by the paired relationship “seller-buyer,” which, in a transformed form characteristic of circulation, expresses internal connections and contradictions between production and consumption. They manifest themselves in the sphere of exchange as contradictions between supply and demand.

Supply and demand for goods are the true regulators of a market economy. At the heart of a market economy is the interaction of supply and demand. It is on this interaction that the answer depends on what to produce, for whom to produce and at what price to sell the produced products in order to extract the necessary profit for further development. It is the relationship between supply and demand that causes fluctuations in market prices. Through these fluctuations, the price level is established at which the equilibrium of supply and demand is ensured, and ultimately the equilibrium of production and consumption.

Everyone knows that one of the main questions that not only sellers and buyers, but also economists of all times have tried to solve is - what determines the prices of products? And from the above, the shortest answer to it appears: the price is determined by the ratio of supply and demand.

In a market economy, the concept of “demand”, along with the concept of “supply,” is one of the fundamental ones. It is even a common joke that a parrot that can pronounce the words “demand” and “supply” can be considered an educated economist.

As you know, the most common, generalizing terms are so capacious and multifaceted that they defy precise definitions; this fully applies to the terms “demand” and “supply”.

First, let's figure out what DEMAND is...

Chapter I :DETERMINATION OF DEMAND

DEMAND- This is a solvent need, the amount of money that buyers can and intend to pay for some products and services they need. Demand cannot be identified with need as such: if a person needs some good, but he does not have money, then he does not have consumer demand, i.e. the total amount of needs exceeds effective demand, and needs cannot be fully satisfied. Thus, payment demand is the demand for goods and services, supported by the funds of buyers. It reflects the part of the population’s needs secured by money for specific quantities of goods and volumes of services for a specific purpose.

Demand is characterized by the quantity of goods of a certain type that the consumer is willing and able to buy at a certain price for them over a certain period of time. It is demand that determines what to buy on the market and in what quantity. Demand is the most important guideline for supply. Conversely, supply on the market appears with such goods that are in demand.

The relationship between supply and demand ultimately determines prices in the market for consumer goods, capital goods, securities, labor and other goods.

1.1: TYPES OF DEMAND AND ELEMENTS OF ITS FORMATION.

There is a distinction between individual demand, i.e. the solvent needs of an individual buyer for a particular product, the total demand of individual buyers and the total demand expressed in money, which is formed at the national level. It represents the real volume of goods that all economic entities are willing to buy at a certain price level.

According to the degree of coverage of goods, they distinguish: a) micro-demand, i.e. demand for certain types of goods, b) macro demand, i.e. demand for more or less large groups of goods.

According to the degree of satisfaction of demand, they distinguish: a) realized demand, b) unsatisfied demand, which is determined by the amount of money that cannot be exchanged for goods due to their lack of sale, c) latent unsatisfied demand, when instead of the desired product that is not on sale, other goods or a type of it that is of poorer quality are purchased.

Based on the nature of demand, they distinguish: a) falling demand, b) full demand, c) growing demand, d) excessive demand, e) irregular demand, g) irrational demand.

Elements of demand formation. The size and structure of demand is influenced by: a) the price of a product or service, b) income of the population, c) the number of buyers, d) availability of goods, e) tastes of buyers, f) fashion, g) advertising, h) prices for related goods, and ) taxation system, j) possibility and conditions of credit, k) guarantee and post-guarantee service, m) seasonal factor, m) demographic factors, o) geographical features, o) national and historical features, p) professional structure of the working population, c) property differentiation of the population, r) exchange rate, s) measures to stimulate demand, etc.

To stimulate demand, you can use the following measures: a) demonstration of goods, b) offer of a refund if you don’t like the product, d) convenience of packaging and delivery of goods, e) bonuses and competitions, etc.

1.2: AMOUNT OF DEMAND. LAW OF DEMAND.

The amount of demand is the quantity of a product that buyers are ready (i.e., willing, able) to buy at a given price during a certain period: day, week, etc.

The amount of demand is inversely related to price: the higher the price of a product, the less quantity of it people are willing to buy, and vice versa, the lower the price, the more quantity of the product people are willing to buy. This ratio is called law of demand.

In order to more easily identify the dependence of demand on price, consider the demand scale, which shows how many goods can be purchased at different prices for a given period.

Price of 1 kg of apples, rub. Buyers are ready to buy

2 25

5 15

8 9

10 6

15 4

20 2

Law of Demand expresses the following functional dependence of demand (C) on price (P): C= F(C), whereF- indicator of quantitative dependence. The higher the price of a product, the less demand for it from buyers. For example, in our country, prices for subscription publications increased in 1991-1998. led to a reduction in subscription volume. There is also an inverse relationship: the lower the price, the greater the demand. Mathematically, this means that there is an inversely proportional relationship between the quantity demanded and the price (however, not necessarily in the form of a hyperbolic one, represented by the formula y=a/x).

The nature of the law of demand is essentially simple. If a buyer has a certain amount of money to purchase a given product, then he will be able to buy less of the product the higher its price, and vice versa. Of course, the real picture is much more complicated, since the buyer can raise additional funds by purchasing another product to replace it. But in general, the law of demand reflects the general tendency of a reduction in the volume of purchases with rising prices for goods in conditions where the buyer’s financial capabilities are limited to a certain limit.

Graphically, the law of demand is presented in the form of the so-called demand curves, reflecting in the form of a graph the connection, the functional relationship between the quantity of demand and the price, that is, the scale of demand.

Curves D-D" on the graph show: when prices rise, the effective need of people decreases, and vice versa, when the price decreases, the demand for products increases.

Demand curves make it possible to establish not only the volume of demand corresponding to a given price for a product, but also to identify the sensitivity of the quantity of demand to changes in the price of a product.

Shifts in demand curves occur under the influence of changes in people's incomes. When income increases, the demand for most goods increases, and vice versa, when income decreases, demand decreases. Economists call these goods normal. But there are also exception goods, for which demand falls as income increases, and as income decreases, demand increases.

Among the goods of the lower category there are also surprising goods, the quantity demanded of which increases with increasing price (i.e., the demand curve is increasing). The demand for many goods in the economy depends on the situation in the market for other goods. For example, if the price of green salad increases, but the price of cabbage remains unchanged, consumers will switch to salads made from fresh cabbage and, accordingly, the demand curve for it will shift to the right. Salads such as lettuce and coleslaw are called substitutes. There are also goods for which demand increases simultaneously, for example, if the price of skis decreases, in all likelihood, the demand for winter sports clothing will increase. Such goods are called complementary.

So, a shift in the demand curve can occur as a result of:

2. changes in consumer tastes;

3. changes in the situation (demand, supply, price) on the market of substitutes or complementary goods.

Theoretically, it is quite possible for the existence of goods that do not obey the law of demand, the amount of demand for which increases as the price increases. They are called Giffen goods. Many attempts have been made to discover such goods. In real life, there are often cases when an increase in the price of a product increases the demand for it, since people think that the increase in price reflects the high quality of the product. But since in this case the effect was not of the price itself, but of other factors, such goods are not usually considered Giffen goods. Here again the conditionality of the premises underlying the law of demand is reflected.

The law of demand and the law of supply do not contain a specific tool or recipe for constructing supply and demand curves. However, they play a huge role in revealing the nature, interpreting market processes and explaining the behavior of sellers and buyers in the market.

1.3: ELASTICITY OF DEMAND

Elasticity is a measure of the response of one variable (demand or supply) to changes in another (price).

The law of demand states that the quantity demanded for a product is inversely related to the change in its price. How big is this dependence? It can be assessed by an indicator called price elasticity of demand. If the quantity demanded reacts strongly to changes in price, then we speak of high elasticity of demand, but if the quantity demanded changes little when the price changes, then we speak of low elasticity. The measure of this change is the coefficient of elasticity of demand (K).

K=Increase in volume of demand (in%)/Decrease in prices (in%)

With an elasticity of demand equal to one, a change in price by, say, 5% causes a change in demand by the same 5%.

If the elasticity of demand is greater than one, i.e. the quantity demanded changes faster than the price, we say that the demand for a given product is elastic. If the elasticity index is less than one, i.e. Since the quantity demanded changes more slowly than the price, we say that the demand for a good is inelastic. It must be remembered that with different initial prices for the same product, the elasticity of demand indicator will most often be different.

Goods with elastic demand usually include:

1. luxuries;

2. goods whose cost is significant for the family budget;

3. easily replaceable items;

Goods with inelastic demand include:

1. essentials;

2. goods whose cost is insignificant for the family budget;

3. hard-to-replace goods;

Every firm that plans to change the price of its product faces elasticity of demand. If a firm raises the price of its product, it wants demand for it to be as inelastic as possible. To do this, it is necessary that the product becomes indispensable for the consumer, and, therefore, it is necessary to cultivate in the buyer “devotion” to the products of this company, its brand. But if a firm wants to make money by lowering prices, it benefits from high elasticity of demand for its goods.

Research shows that the demand for most agricultural products is highly inelastic, on the order of 0.2 or 0.25. Due to this, an increase in agricultural production due to good weather conditions or increased production efficiency simultaneously reduces both the prices of agricultural products and the total revenue (income) of farmers. For farmers as a social group, the inelastic nature of demand for their produce means that harvesting a very large harvest may not be desirable! For policymakers, this means that increasing farmers' incomes depends on limiting farm production.

Generally speaking, the demand for a product is usually more elastic the longer the period of time for making decisions. One reason for this rule is that many consumers are creatures of habit. If the price of a product increases, we take time to find and try other products until we are convinced that they are acceptable. If the price of beef increases by 10%, consumers may not immediately reduce their purchases. But after a while they can transfer their sympathies to the bird or fish, for which they now “have a taste.” Another explanation for this rule has to do with the durability of the product. Research shows that "short-term" demand for gasoline is less elastic (0.2) than "long-term" demand (0.7). Why is this happening? Because over the long term, large, gas-guzzling cars wear out and are replaced by smaller, more fuel-efficient cars as gasoline prices rise. A recent applied study of Philadelphia's commuter rail system finds that the "long-run" elasticity of demand for rail tickets is nearly 3 times greater than the "short-run" elasticity. More precisely, the short-term reaction of passengers (determined directly at the moment of changing the value of the ticket) is inelastic and equal to 0.68. In contrast, the long-run response (measured over a four-year period) is elastic and equal to 1.84. The higher long-run elasticity is due to the fact that, given enough time, potential rail passengers have the opportunity to make the necessary decisions regarding the purchase of a car or changes in the location of home and work. In any case, this difference in elasticity led the author to the conclusion that a commuter system serving about 100 thousand passengers could immediately increase daily revenue by $8 thousand by increasing the ticket price by $0.25, or by about 9%. Why? Because short-term demand is inelastic. However, in the long term, the same 9% increase in price will lead, according to estimates, to a decrease in total revenue by more than $19 thousand per day, since demand is elastic.

The general conclusion is that price increases that are beneficial in the short term are fraught with financial difficulties in the long term.

Chapter II :DEFINITION OF SENTENCE.

Offer - this is the totality of goods that are on the market or capable of being delivered there; this is the sum of goods that sellers are willing to sell at different dynamics of the market price. In other words, the supply represents market funds, that is, the totality of goods that arrives for final sale.

Supply is predetermined by production, but is not identical to it. Equality of supply and demand does not always mean equality of production and need.

Supply characterizes the ability and desire of the seller (manufacturer) to offer their goods for sale on the market at certain prices. This definition outlines the proposal and reflects its essence from the qualitative side. In quantitative terms, supply is characterized by its size and volume.

Volume, amount of supply - is the quantity of a product that a seller is willing, able and able, according to availability or production capabilities, to offer for sale on the market over a period of time at specified prices.

Like the volume of demand, the quantity of supply depends not only on price, but also on a number of non-price factors, including production capabilities, the state of technology, resource supply, price levels for other goods, and inflation expectations.

2.1: AMOUNT OF SUPPLY. LAW OF SUPPLY.

If for buyers the price determines the amount of demand for a product or service, then for producers it determines the amount of supply. The size of the offer is the quantity of a good that will be offered for sale at a given price in a given period.

Law of supply is as follows: the higher the price, the greater the supply; the lower the price, the lower the quantity supplied. Why does the law of supply work? Firstly, because at an increased price, manufacturers will want to provide more products than before. Secondly, there is the “new seller effect”. The fact is that any kind of production costs the manufacturer something and requires certain costs and expenses from him. They are of different nature. On the one hand, in order to produce a certain amount of goods, the manufacturer must acquire and spend factors of production: land, labor and capital. These are the so-called production costs.

An increase in the supply of a product with an increase in its price is generally due to the fact that, with constant production costs per unit of product, with an increase in price, profit increases and it becomes profitable for the manufacturer (seller) to sell more of such a product. The real picture in the market is more complex than this simple diagram, but the trend expressed in it usually takes place. As the price increases, the quantity of goods offered for sale will increase. This is illustrated by a hypothetical example in a sentence scale.

Supply scale shows how many goods sellers are willing to sell at different prices. The given figures reveal the dependence of supply on price.

Price of 1 product sellers are ready to sell

20 25

15 15

13 9

8 4

5 2

Graphically, the law of supply can be displayed supply curve displaying in the form of a graph the relationship, the functional relationship between the supply quantity and the price. Supply curves are usually denoted by the letter S, representing the first letter of the English word " supply"- offer.

This graph shows that as the price of a product increases, supply will increase.

By analogy with demand, one should distinguish between the quantity of supply, which characterizes the change in the volume of supply depending on price when moving along the supply curve, and supply as a whole, characterized by the shape and position of the entire supply curve. The shift of the entire supply curve is due to the action of non-price factors.

Change in product supply in the market occurs under the influence of the following conditions:

1. resource prices (as they increase, the supply of goods decreases);

2. the presence of interchangeable and complementary goods and the movement of their prices;

3. the level of technology used in the production of similar products;

4. taxes, grants and subsidies affecting the development of production;

5. quality of resources and factors of production;

6. the number of sellers and their behavior in the market;

7. competition in the market;

8. manufacturers' expectations regarding possible price changes;

9. natural disasters and wars;

10. political situation in the country.

2.2: ELASTICITY OF SUPPLY.

Supply can also be elastic or inelastic. The degree to which the quantity supplied changes in response to an increase in price characterizes the elasticity of supply. The elasticity of supply refers to the degree of its change depending on price dynamics. The measure of this change is the coefficient of elasticity of supply (K p):

K p = supply volume (in%) / price increase (in%)

Supply becomes elastic when its quantity changes by a greater percentage than the price. As the experience of Western countries shows, the coefficient of elasticity of supply - subject to equilibrium prices and over a long period - tends to increase (i.e., an increase in prices by a certain amount causes an increase in production to a slightly greater extent).

Supply is inelastic if it does not change when prices rise or fall. This is typical for many goods in the short term. For example, elasticity is low for perishable products that cannot be stored in large quantities. In addition, supply is more inert (compared to demand). After all, it is quite difficult to switch production to the production of new products and, in connection with this, to redistribute resources to change the number of products produced. Therefore, knowledge of the dynamics of the supply elasticity coefficient is useful for predicting production volume depending on price changes.

Thus, the direct dependence of supply and demand on market prices became known. This dependence is manifested in the regulating influence of price on the relationship between supply and demand, and therefore on the economic situation of sellers and buyers. There are two options for such regulation, in which one side of a market transaction wins and the other loses.

The first option: the market price increases, and this leads, on the one hand, to a decrease in demand and, on the other, to an increase in supply. As a result, economic benefits accrue to producers and sellers.

The second option: the price of goods decreases, which contributes, on the one hand, to an expansion of demand and, on the other hand, to a reduction in supply. As a result, buyers benefit economically.

2.3: EQUILIBRIUM PRICE.

In conditions of market competition, the interaction of market demand and market supply regulates the price until the moment when the quantities of supply and demand coincide, and an “equilibrium price” is established.

Equilibrium price is established as a result of balancing supply and demand, when the quantity of goods that buyers want to purchase corresponds to the quantity that producers offer on the market. In other words, the equilibrium price is the price at a level where the quantity supplied matches the quantity demanded.

Market equilibrium is established for a very specific period of time, since supply and demand change over time. A change in either demand or supply entails a change in the equilibrium price. A stable equilibrium is established when the volume of supply adapts to the volume of demand, and the price approaches the equilibrium price. At each subsequent moment of time, the market equilibrium is established as a certain new value of the equilibrium price. On the graph it looks like this:

Equilibrium price.

20 D S

8 balance point

200 400 600 700 800

WhereD-demand, andS- offer.

As a result of free competition in the market, a certain limit for price growth and reduction is formed. It acts as a demand price and an offer price. The bid price is the maximum price that buyers are willing to pay for the product, and the ask price is the minimum price at which the seller is still willing to sell his product in order not to incur a loss.

Under monopoly conditions, this dependence can be violated. Monopolies have the ability to reduce prices below production costs in order to ruin a competitor and conquer the market, and then raise them to compensate for losses and get maximum profits, or immediately raise prices, taking advantage of their monopoly position.

To limit the desire of monopolies for limitless price increases, government intervention in market pricing is required by establishing fixed or maximum possible prices for the products of natural monopolies, which they do not have the right to increase.

All of the above indicates that the equilibrium price and equilibrium quantity have the following unusual properties:

1. There are no more and no less goods available on the market than are needed for human consumption. All costs of producing goods are recouped by selling them at the equilibrium price. Therefore, the achieved equilibrium indicates the greatest economic efficiency existing market situation. Nobel laureate French economist M. Allais derived theorems with the following fundamental provisions: “... every equilibrium situation of a market economy is a situation of maximum efficiency, and, conversely, every situation of maximum efficiency is an equilibrium situation of a market economy.”

2.At the equilibrium point, and is expressed greatest social effect. For the equilibrium price, the consumer acquires the marginal (for his income) amount of utility.

3. The market does not reveal either a surplus of goods (a quantity that is excessive for sale at a given level of income of the population), or a shortage (shortage) of goods.

In conclusion, the question arises: is there an internal force in the market itself that is capable of overcoming the disequilibrium state of the market (excess of demand over supply, or vice versa) and generating a tendency to sell goods at the equilibrium price?

Chapter III: PROBLEMS OF PRACTICE STUDYING DEMAND AND SUPPLY ON THE LABOR MARKET IN RUSSIA.

The labor market in our country has more or less stabilized, and for some specialties a dynamic balance has developed between supply and demand. Here is some information about the state of affairs in this area. In first place in popularity among employers, of course, is the profession of “manager.” Although it must be admitted that at the moment this concept is as general as “engineer” was ten years ago. There is also a steady demand for assistant secretaries, chief accountants, and programmers. As for the structure of demand, the companies most actively attracting new personnel are those working in trade (40% of requests for specialists), the service sector (35%), as well as banks (11%).

As an example, let’s focus on the most “computer” of all those available in the “hot ten” (list of the most in-demand professions) specialties - a programmer in the broad sense of the word.

As already noted, the demand for them is not so small. For example, in the “tens” of the middle and end of last year, programmers took sixth place. True, at the end of the year the demand for programmers turned out to be somewhat less than the supply. However, this situation may change in the near future: new programmers will be needed not only to replace the old ones, but also to implement new projects. This is mainly due to the predicted widespread adoption of network technologies. Moreover, almost immediately the wave of demand for local network specialists may be followed by a wave of demand for global network specialists. According to our forecasts, this surge will begin in the coming months - as soon as company managers formulate their requirements for network specialists. Another example: until recently, few people had heard of the R/3 system of the German company SAP. And today an American specialist who has worked with this system for more than three years can count on payment from $150 per hour, plus a car, plus housing, and plus even more favorable offers from outside. For now, this is an example from “their” life, but recently SAP has become more active in our market.

However, even those with extremely necessary professions should not rely on the fact that everything will work out by itself. “The most important of the arts” for a job seeker is writing a resume (Carriculum Vitae). With a certain degree of confidence, we can say that a well-written resume (or a successful interview) is “plus $200 in salary.” But most programmers are introverts who have difficulty making contact, and it is not easy for them to write anything about themselves. Moreover, tell something in the 15-20 minutes that are on average allotted for an interview. Therefore (more precisely, also because of this) a two-fold dispersion in salaries among specialists of the same qualifications doing approximately the same work is possible, since some of them were able to “present” themselves, while others were not. The correct implementation of these “ritual” actions is now, as a rule, achieved through one’s own mistakes, although large recruiting firms are already developing the practice of providing free consultations.

By agreement with the editors of the weekly Computerworld Russia, we plan to publish on its pages a number of articles devoted to the state of affairs on the labor market. I would like to hope that this topic will interest readers and cause them to respond. In particular, “feedback” would be extremely useful, with the help of which we can find out which topics from the ones we offer are most interesting to readers.

CONCLUSION:

The market process consists of many acts of exchange of goods and services. Each such act involves a seller, represented by the supply of goods, and a buyer, represented by the demand for goods. Supply and demand are closely related and continuously interacting categories and serve as a connecting mechanism between production and consumption. The amount of demand, both individual and aggregate, is influenced by price and non-price factors, which must be clearly monitored on an ongoing basis by special departments.

The result of the interaction of supply and demand is the market price, which is also called the equilibrium price. It characterizes the state of the market in which the quantity of demand is equal to supply. To measure the magnitude of changes in demand and supply, the concept of elasticity is used as a measure of the response of one variable to a change in another.

It should also be noted that demand is one of the most important factors in the formation of the economic strategy of an enterprise, since only the production of “necessary” goods that are in demand among buyers is expedient and profitable from an economic point of view.

BIBLIOGRAPHY:

1. Course of economic theory: Textbook. - M.: 1993

2. Fundamentals of Economic Theory: Textbook / Ed. V.D. Kamaeva.-M.: Publishing house of MSTU named after Bauman, 1996

3. Economics as a science. M. Alle, M.: 1995

4. Fundamentals of political economy. Mill J.S., M.: 1980

5. Principles of economic science. Marshall A., M.: 1993, T.2. book 5. Chapter 15. T.3.book.6.Appendix A.

6. Basics of economic theory. V. N. Shcherbakov, V. M. Ageev, M.: 2000

7. Political economy: Textbook for universities/Medvedev V.A., Abalkin L.I. and others - M.: 1988

8. Economic theory: textbook. E.F.Borisov-M.: 2000

9. Economics: reference book, E.F. Borisov, A.A. Petrov, F.F. Sterlikov.-M.: 1998

10. Economics course / textbook - edited by B.A. Raizberg, M.: 2001

11. Introduction to market economics / ed. AND I. Livshitsa, I.N. Nikulina.-M.: Higher School, 1994

Demand. Law of Demand

Demand (D- from English demand) is the intention of consumers, secured by means of payment, to purchase a given product.

Demand is characterized by its magnitude. Under quantity of demand (Qd) It is necessary to understand the quantity of goods that the buyer is willing and able to purchase at a given price in a given period of time.

The presence of demand for a product means the buyer agrees to pay the specified price for it.

Ask price- This is the maximum price that a consumer is willing to pay when purchasing a given product.

There is a distinction between individual and aggregate demand. Individual demand is the demand in a given market of a specific buyer for a specific product. Aggregate demand is the total amount demanded for goods and services in a country.

The quantity of demand is influenced by both price and non-price factors, which can be grouped as follows:

price of the product itself X (Px);
prices for substitute goods (Pi);
consumer cash income (Y);
consumer tastes and preferences (Z);
consumer expectations (E);
number of consumers (N).

Then the demand function, characterizing its dependence on these factors, will look like this:

The main factor determining demand is price. A high price of a product limits the amount of demand for that product, and a decrease in price leads to an increase in the amount of demand for it. From the above it follows that the quantity demanded and the price are inversely related.

Thus, there is a relationship between the price and quantity of goods purchased, which is reflected in law of demand: ceteris paribus (other factors influencing demand are unchanged), the quantity of a good for which demand is presented increases when the price of this good falls, and vice versa.

Mathematically, the law of demand has the following form:

Where Qd- the amount of demand for any product; / – factors influencing demand; R- the price of this product.

A change in the quantity of demand for a particular product caused by an increase in its prices can be explained by the following reasons:

1. Substitution effect. If the price of a product increases, then consumers try to replace it with a similar product (for example, if the price of beef and pork rises, then the demand for poultry meat and fish increases). The substitution effect is a change in the structure of demand, which is caused by a decrease in purchases of a more expensive product and its replacement with other goods with unchanged prices, since they now become relatively cheaper, and vice versa.

2. Income effect which is expressed in the following: when the price increases, buyers seem to become a little poorer than they were before, and vice versa. For example, if the price of gasoline doubles, then as a result we will have less real income and, naturally, will reduce the consumption of gasoline and other goods. The income effect is a change in the structure of consumer demand caused by a change in income from price changes.

In some cases, certain deviations from the rigid dependence formulated by the law of demand are possible: an increase in price may be accompanied by an increase in the quantity of demand, and a decrease in price may lead to a decrease in the quantity of demand, while at the same time it is possible to maintain stable demand for expensive goods.

These deviations from the law of demand do not contradict it: rising prices can increase the demand for goods if buyers expect their further increase; lower prices may reduce demand if they are expected to fall even further in the future; the acquisition of consistently expensive goods is associated with the desire of consumers to invest their savings profitably.

Demand can be depicted as a table showing the quantity of a good that consumers are willing and able to buy during a certain period. This dependency is called demand scale.

Example. Let us have a demand scale that reflects the state of affairs on the potato market (Table 3.1).

Table 3.1. Demand for potatoes

At each market price, consumers will want to buy a certain amount of potatoes. If the price decreases, the quantity demanded will increase, and vice versa.

Based on these data, you can build demand curve.

Axis X let's put aside the quantity of demand (Q), along the axis Y- appropriate price (R). The graph shows several options for the demand for potatoes depending on their price.

Connecting these points we get the demand curve (D), having a negative slope, which indicates an inversely proportional relationship between price and quantity demanded.

Thus, the demand curve shows that, while other factors influencing demand remain constant, a decrease in price leads to an increase in the quantity demanded, and vice versa, illustrating the law of demand.

Rice. 3.1. Demand curve.

The law of demand also reveals another feature - diminishing marginal utility since the decrease in the volume of purchases of goods occurs not only due to an increase in prices, but also as a result of the saturation of the needs of buyers, since each additional unit of the same product has a less and less useful consumer effect.

Offer. Law of supply

The offer characterizes the seller’s willingness to sell a certain quantity of goods.

There are two concepts: supply and quantity supplied.

Sentence (S- supply) is the willingness of producers (sellers) to supply a certain amount of goods or services to the market at a given price.

Supply quantity- this is the maximum quantity of goods and services that producers (sellers) are able and willing to sell at a certain price, in a certain place and at a certain time.

The value of the supply must always be determined for a specific period of time (day, month, year, etc.).

Similar to demand, the quantity of supply is influenced by many price and non-price factors, among which the following can be distinguished:

price of the product itself X(Px);
resource prices (Pr), used in the production of goods X;
technology level (L);
company goals (A);
amounts of taxes and subsidies (T);
prices for related goods (Pi);
Manufacturers' expectations (E);
number of goods manufacturers (N).

Then the supply function, constructed taking into account these factors, will have the following form:

The most important factor influencing the quantity of supply is the price of the product. The income of sellers and producers depends on the level of market prices, so the higher the price of a given product, the greater the supply, and vice versa.

Offer price- this is the minimum price at which sellers agree to supply this product to the market.

Assuming that all factors except the first remain unchanged:

we get a simplified proposal function:

Where Q- the amount of supply of goods; R- the price of this product.

The relationship between supply and price is expressed in law of supply the essence of which is that The quantity supplied, other things being equal, changes in direct proportion to the change in price.

The direct response of supply to price is explained by the fact that production responds quite quickly to any changes occurring in the market: when prices increase, commodity producers use reserve capacity or introduce new ones, which leads to an increase in supply. In addition, the presence of a trend towards rising prices attracts other producers to this industry, which further increases production and supply.

It should be noted that in short term An increase in supply does not always immediately follow an increase in price. Everything depends on the available production reserves (availability and workload of equipment, labor, etc.), since the expansion of capacity and the transfer of capital from other industries usually cannot be carried out in a short time. But in long term an increase in supply almost always follows an increase in price.

The graphical relationship between price and quantity supplied is called the supply curve S.

The supply scale and supply curve for a good shows the relationship (other things being equal) between the market price and the quantity of this good that producers want to produce and sell.

Example. Let's say we know how many tons of potatoes can be offered by sellers on the market in a week at different prices.

Table 3.2. Potato offer

This table shows how many goods will be offered at the minimum and maximum prices.

So, at a price of 5 rubles. For 1 kg of potatoes, a minimum quantity will be sold. At such a low price, sellers may sell another product that is more profitable than potatoes. As the price increases, the supply of potatoes will also increase.

Based on the data in the table, a supply curve is constructed S, which shows how much of a good producers would sell at different price levels R(Fig. 3.2).

Rice. 3.2. Supply curve.

Changes in demand

A change in demand for a product occurs not only due to changes in prices for it, but also under the influence of other, so-called “non-price” factors. Let's take a closer look at these factors.

Production costs are primarily determined prices for economic resources: raw materials, materials, means of production, labor - and technical progress. Obviously, rising resource prices have a major impact on production costs and output levels. For example, when in the 1970s. Oil prices have risen sharply, leading to higher energy prices for producers, increasing their production costs and reducing their supply.

2. Production technology. This concept covers everything from genuine technical breakthroughs and better use of existing technologies to the usual reorganization of work processes. Improved technology makes it possible to produce more products with fewer resources. Technical progress also allows you to reduce the amount of resources required for the same output. For example, today manufacturers spend much less time producing one car than 10 years ago. Advances in technology allow car manufacturers to profit from producing more cars for the same price.

3. Taxes and subsidies. The effect of taxes and subsidies is manifested in different directions: increasing taxes leads to an increase in production costs, increasing the price of production and reducing its supply. Tax cuts have the opposite effect. Subsidies and subsidies make it possible to reduce production costs at the expense of the state, thereby contributing to the growth of supply.

4. Prices for related goods. Market supply largely depends on the availability of interchangeable and complementary goods on the market at reasonable prices. For example, the use of artificial raw materials, which are cheaper than natural ones, makes it possible to reduce production costs, thereby increasing the supply of goods.

5. Manufacturers' expectations. Expectations of future price changes for a product may also affect a manufacturer's willingness to supply the product to the market. For example, if a manufacturer expects prices for its products to rise, it can begin to increase production capacity today in the hope of making a profit later and hold the product until prices rise. Information about expected price reductions may lead to an increase in supply now and a decrease in supply in the future.

6. Number of commodity producers. An increase in the number of producers of a given product will lead to an increase in supply, and vice versa.

7. Special factors. For example, certain types of products (skis, roller skates, agricultural products, etc.) are greatly influenced by the weather.

1. Demand is the intention of consumers, secured by means of payment, to purchase a given product. Quantity demand is the quantity of a good that a buyer is willing and able to purchase at a given price in a given period of time. According to the law of demand, a decrease in price leads to an increase in the quantity demanded, and vice versa.

2. Supply is the willingness of producers (sellers) to supply a certain amount of goods or services to the market at a given price. Quantity supplied is the maximum quantity of goods and services that producers (sellers) are willing to sell at a certain price during a certain period of time. According to the law of supply, an increase in price leads to an increase in the quantity supplied, and vice versa.

3. Changes in demand are caused by both price factors - in this case there is a change in the quantity of demand, which is expressed by movement along the points of the demand curve (along the demand line), and non-price factors, which will lead to a change in the demand function itself. On the graph, this will be expressed by the demand curve shifting to the right if demand is rising, and to the left if demand is falling.

4. A change in the price of a given product affects a change in the supply of that product. Graphically, this can be expressed by moving along the supply line. Non-price factors influence changes in the entire supply function; this can be clearly represented in the form of a shift of the supply curve to the right - when supply increases, and to the left - when it decreases.

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