1. R.HARIHARAN AP/EEE

2.  The following factors determine the demand for a good: ◦ Price of the good ◦ Tastes ◦ Information ◦ Prices of related goods  Complements and substitutes ◦ Income ◦ Government rules and regulations ◦ Other

3. Law of Demand consumers demand more of a good the lower its price, holding constant all other factors that influence consumption p, $ per kg 200220 Demand curve for pork, D 1 240286 Q, Million kg of pork per year 0 2.30 3.30 4.30 14.30

4.  Quantity demanded - the amount of a good that consumers are willing to buy at a given price, holding constant the other factors that influence purchases.  Demand curve - the quantity demanded at each possible price, holding constant the other factors that influence purchases

5.  The processed pork demand function is: Q = D(p, p b, p c, Y) ◦ where Q is the quantity of pork demanded ◦ p is the price of pork (dollars per kg) ◦ p b is the price of beef (dollars per kg) ◦ p c is the price of chicken (dollars per kg) ◦ Y is the income of consumers (thousand dollars)

6.  The following factors determine the supply for a good: ◦ Price of the good ◦ Costs ◦ Government rules and regulations

7.  Quantity supplied - the amount of a good that firms want to sell at a given price, holding constant other factors that influence firms’ supply decisions, such as costs and government actions  Supply curve - the quantity supplied at each possible price, holding constant the other factors that influence firms’ supply decisions

8. p, $ per kg 220176 Supply curve,S 1 300 Q, Million kg of pork peryear 0 3.30 5.30 An increase in the price… causes a movement along the curve…. and a decrease in the quantity supplied….

9.  The processed pork supply function is: Q = S(p, p h ) ◦ where Q is the quantity of pork supplied ◦ p is the price of pork (dollars per kg) ◦ p h is the price of a hog (dollars per kg)

10.  Elasticity is a measure of the responsiveness of one variable to another.  The greater the elasticity, the greater the responsiveness.  Demand is elastic if the percentage change in quantity is greater than the percentage change in price. E > 1

11.  Demand is inelastic if the percentage change in quantity is less than the percentage change in price.  E < 1

12.  Elastic Demand means that quantity changes by a greater percentage than the percentage change in price.  Inelastic Demand means that quantity doesn't change much with a change in price.

13.  Elasticity of Supply: a measure of the way suppliers respond to a change in price  Elastic: sensitive/responsive to change in price (greater than 1)  Inelastic: not sensitive or not responsive to a change in price (less than 1)  Unitary: Equal change in price to equal change in supply (= to 1)

14.  A supplier’s responsiveness to a price change is called _________________  (think like a supplier/seller)  3 Factors that will determine a product’s elasticity 1. Availability of resources required to make the product 2. Amount of time required to make the product 3. Skill level of the worker needed to make the product

15.  A product has elastic supply when a price change causes a significant change in the quantity supplied. (What would have to be true (of a product) to allow a seller to quickly increase production if the market price goes up?) 1. Abundance of resources required to make the product 2. Product can be made quickly 3. Low skill level of workers required

16.  A price change causes very little change in the quantity supplied= Inelastic. This happens because…  1.The product requires scarce resources  2. It takes a long time to make  3. It requires a high skill level of workers  examples?  Hand crafted furniture  diamonds

17.  Planning and scheduling production  Acquiring inputs  Making provision for finances  Formulating pricing strategy  Planning advertisement

18.  Specifying the objective  Determining the time perspective  Making choice of method  Collection of data  Estimation and interpretation of results

19. QUALTITATIVE TECHNIQUES 1)EXPERT OPINION Delphi method. 2)SURVEY 3)MARKET EXPERIMENT Test marketing Controlled experiments. QUANTITATIVE TECHNIQUES 1)Time Series Analysis. 2)Barometric Analysis. a) leading indicators b)Coincident indicators c) lagging indicators.