Lecture number 7
Supply and demand.
Market equilibrium.
The plan:
Basis of the mechanism of market
self-regulation;
The market mechanism of
competitive equilibrium;
The content and form of market
equilibrium.
1. Basis of the mechanism of selfregulation of the market is supply and
demand.
Demand - A form of expression
of needs, available on the
market
and
provide
the
appropriate cash-governmental
means.
The market operates the
objective law of demand. If
the prices rise, the demand
decreases.
Value of goods sold in the market:
Р азно вид но с ти
про д авае м ы х то варо в
А
Б
В
Г
Д
Ц е на за е д иницу
то вара в
д е не ж но м
вы раж е нии
5
4
3
2
1
С п р о с , т .е .
ко лич е с тво
про д аж то вара
10
15
20
25
40
Demand is influenced by the
following factors:
The level of income in the society;
Market size of the product;
availability of interchangeable
goods;
objective tastes
Buyer;
Proposal - is aggregate of goods
in the market or are likely to be
produced and presented to
lennymi for sale on relevant,
satisfies the producer prices.
Determined by laws of supply
relationship
between
the
market price and quantity, the
product conductivity and
offered for sale.
Value, quantity supplied to the market and offer for
sale of goods within a fixed unit of time.
Р азно вид но с ти
про д авае м ы х то варо в
А
Б
В
Г
Д
Ц е на за е д иницу
то вара в
д е не ж но м
вы раж е нии
5
4
3
2
1
С п р о с , т .е .
ко лич е с тво
про д аж то вара
40
35
30
25
15
To offer the following factors:
 The price of manufactured products;
 The level of profit;
 Lower production costs, provides:

a) by NTP;
 b) the degree of monopolization of the
market;
 c) the movement of the price of other
goods, ie interchangeability.
2. The equilibrium market price
is at a point of intersection of
the supply and demand curves.
Price equilibrium price should
consider the level at which the
proposal is consistent with the
demand.
The equilibrium price is established
under two conditions:
When the amount that the buyer
wants to buy corresponds to the
amount that is pro-davtsy want to
sell;
No tendency to changes in price
and quantity.
Supply
and
Demand
Experiencing the impact of
multiple factors and different
ways to react to them. The degree
of changes in demand and supply
under the influence of a factor
characterized by their flexibility.
Elasticity of demand - is
the degree of reaction
purchased an amount of
goods on vibrational
banie its market price.
Quantitatively and qualitatively, the elasticity of
demand can be represented by three factors:
 Percent decrease in price => per cent increase
product sales => total revenue increases. The
elasticity of demand> 1.
 Percent decrease in price = increase in the
number of sales => revenue unchanged. The
elasticity of demand = 1.
 Price reduction => slight increase in the
number of sales => revenue declines. Inelastic
demand. 0 <elasticity <1.
Supply elasticity describes the
changes between the price and
offers for the sale of goods, as
well as the relative change in the
volume of production and supply
of goods in connection with the
movement of the price in the
market.
Coefficient of elasticity of
- is the percentage change
in the quantity of goods to
the percentage change in
the price of goods.
3. In theory, market equilibrium, given to the
importance of time. From this point of view are
distinguished:
 Instant harmony - when the offer consistently;
 Short-run equilibrium - when supply increases
without an increase in the equipment;
 Prolonged balance of the normal price - when
businesses replace and enhance equipment,
and the number of the enterprises themselves
can change due to free entry and exit from the
industry.
Price extended equilibrium
slightly below the price of
short-term
balance
and
significantly lower prices
instantaneous
equilibrium.
This case is called the case of
growing costs.