Course objectives & summary

Objectives of Demand:

1. Consumer Behavior Understanding: To analyze how consumers make choices based on preferences, income, and prices.
2. Price Sensitivity: To determine how changes in price affect the quantity of a good or service demanded (price elasticity).
3. Market Demand Estimation: To aggregate individual demands to assess total market demand for goods and services.
4. Impact of External Factors: To examine how factors like income changes, consumer preferences, and prices of related goods influence demand.

Objectives of Supply:

1. Producer Behavior Understanding: To analyze how producers decide on the quantity of goods to supply based on production costs and market conditions.
2. Cost Structure Analysis: To evaluate how changes in production costs (like wages and raw materials) affect supply.
3. Market Supply Estimation: To aggregate individual supply curves to determine total market supply for goods and services.
4. Response to Market Changes: To assess how external factors (like technology changes or government policies) impact supply decisions.

Summary:

Demand represents how much of a good consumers want at various prices, influenced by factors such as income and preferences. Supply indicates how much of a good producers are willing to sell at different prices, by production costs and market conditions. The interaction of demand and supply determines market prices and quantities, leading to equilibrium where the quantity demanded equals the quantity supplied. Understanding these concepts helps in predicting market trends and making informed economic decisions.