Alfian's K.W.L (Demand & Supply)

What I know (W)

• PPC curve

What I want to know (W)

• How demand and supply affects a curve
• What are the laws of demand and supply
• What's Supply
• What's Demand
• What is a market equilibrium 

What I learned (L)

• Demand and supply can affect the curve by shifting the curve left/right due to non-price determinate factors and secondly move points along the curve due to prices
• The law of demand states that there is an inverse relationship between the price and the quantity demanded of the good or service, during a specific period of time, ceteris paribus
• The law of supply states that there is a direct relationship between the price and the quantity supplied of the good or service, during a specific period of time, ceteris paribus.
• Demand refers to the quantity of a good or services which consumers are willing and able to buy at different prices levels, over a specific time period, ceteris paribus
• Supply refers to the quantity of a good or services which sellers are willing and able to offer for sale at different prices levels, over a specific time period, ceteris paribus
• Equilibrium refers to a situation whereby there is no tendency to change
• The acronym for non-price determinants (Demand) PET PIG
• The acronym for non-price determinants (Supply) WET PIGS
• For both demand and supply curve, movements along the curve are due to prices onl

Shane's K.W.L (Demand & Supply)

What I know (W)

• Didn't know anything

What I want to know (W)

• What is the theory of demand?
• What is the law of demand?
• How does the demand curve work?
• Why is the demand curve downward sloping
• What affects demand?
• What is supply?
• What is a supply curve?
• What is the law of supply?
• Why is it upward sloping?
• What factors affect supply?
• What is market equilibrium?

What I learned (L)

• Demand or effective demand is the quantities of a good consumer are willing and able to buy at different prices over a specific time period.
• The law of demand is the inverse relationship between quantity demanded of a good or service and the price. During a certain time period. Ceteris paribus.
• The demand curve is downward sloping due to the substitute effect and the income effect. Substitute effect is when the price of a similar good price falls making its demand to go up. Income effect is when the price of a good falls, consumers are able to buy more thus higher quantity demanded.
• The demand curve illustrates different prices and quantity demanded at periods of time.
• The price of a good or service will affect its demand, the higher the price the lower the quantity demanded.
• Also non-price determinants affect quantity demanded of the good or service. PETPIGS is the acronym.
• Supply is the quantity of a good or service which sellers are willing and able to produce for consumers at different prices over a period of time. Ceteris paribus.
• The law of supply is that there is a positive relationship between price of which good or service is supplied and quantity supplied. Due to marginal cost producers are willing to produce more output if they are compensated, or firms allocate more resources to produce and sell goods of higher price to maximize profits.
• One factor that affects supply curve is price. Which affects the quantity supplied. As higher price leads to more quantity supplied.
• Next the non-price determinants of supply affect the quantity supplied. The acronym is WETPIGS
• Market equilibrium is the situation where there is no tendency to change. The point where consumers will not pay more than the equilibrium price and whereby producers will not sell less than the equilibrium  price to sell at.

Analyse with evidence how the demand and supply of a product changes and its resulting effect on the new equilibrium price and quantity.

Our group has selected N95 mask as our product

Firstly demand refers to the quantity of good/services consumers are willing and able to buy at different prices over specific time periods. Which then lead to the law for demand states that there is a inverse relationship between prices and quantity demanded of a good/services, during a specific period of time, ceteris paribus. If the price for demand increases, the quantity demanded would decrease, vice-versa. Therefore demand can be affected by prices and non-prices determinants.

Non-price determinants for demand are able cause shifts in demand curve to both right or left. With such shifts, it will affect the the market equilibrium. As a result attaining a new market equilibrium. With the price of the good being a non-price determinate,it will affect the equilibrium price and quantity of N95 masks. In 2013, the 2013 Southeast Asian haze was notable for causing record high levels of pollution in Singapore and several parts of Malaysia. Singapore was expecting a bad haze to come in which was an aftermath of deforestation in Indonesia. People were very conscious of the health with the upcoming haze.They were expected buy the N95 mask as soon as possible. Companies were to increase the price if N95 masks in the future as they see this as an opportunity in gaining more profits. People were likely to but the mask first as they are relatively cheaper before the haze. Therefore the demand in N95 masks increased price of the good in which would  lead to a shift of the curve to the right as shown in the diagram.

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As show in the diagram, the shift of the demand curve to the right would cause a shortage in quantity demanded from the initial equilibrium. An increase in price would be needed to increase the quantity supplied to reduce the shortage initially.With the shift in demand, the first equilibrium would increase to form a new price/supply equilibrium at the intersection points and also upward movements on the demand curve to increase prices and quantity.

Secondly would be the Supply refers to the quantity of a good or services which sellers are willing and able to offer for sale at different price levels, over a specific period of time, ceteris paribus. This would then lead us to the law of supply where instead of an inverse relationship withe the price and quantity supplied, instead there is a direct relationship between these two. This would be over a specific period of time, ceteris paribus. In which if the prices of supply were to increase, the quantity supplied would also increase, vice-versa. Similarly the supply curve can be affected by both the price or the non-price determinate.

Non-price determinants for supply are also able cause shifts in supply curve alike to the demand curve, both left and to the right. With the shift in the supply curve,  it will affect the the market equilibrium. As a result a new market equilibrium would be reached. Technology is a non-price determinate that affects the supply curve. For example in other countries where they were also going through the haze, they had limited resources to provide it's people with the N95 masks. Whereas in Singapore with the technological advancement, Singapore could produce more N95 with the machinery. With the the high demand where Minister of Defence Ng Eng Hen noted that panic-buying of masks has created an “artificial shortage” that has caused "supply-chain bottlenecks" at that time in 2013. With the running out of stock for N95, more masks were made.This increase the supply thus lead to a shift of the curve outwards.



Proven  in the diagram, the shift of the supply curve to the right would cause a surplus in quantity demanded from the initial equilibrium. An decrease in price would be needed to reduce the quantity supplied to lighten the burden of the surplus.With the shift in supply, the first equilibrium would decrease to form a new price/supply equilibrium at the intersection points and also downward movements on the demand curve to decrease prices and quantity.


A video more on how the demand and supply of a product changes and its resulting effect on the new equilibrium price and quantity = Click Here

                                 DONE BY: ALFIAN, DERRON, LENNY, SHANE

The choice between investing in capital goods and producing consumer goods now affects the ability of an economy to produce in the future.

CHOICE

Choice is a concept derived from scarcity. Where there is limited resources, there are decisions to be made to allocate these limited resources to maximise the productivity of the resources. Economic agents must decide what to produce, for whom to produce, and how to produce in order to achieve maximum satisfaction from society.

CAPITAL GOODS

Capital goods are also known as producer goods which are manmade goods used to aid production. They're used in the future, and not for immediate, final consumption, i.e machinery equipment.

CONSUMER GOODS

There are two types of consumer goods- Non-durables, and durables. Non- durables are immediately consumed and can only be used once such as food products. Durables have longer lifespans and can  be consumed immediately or over time, such as television sets.

With relevance from the production possibility curve (PPC) above, for a country to attain C amount of consumer goods, the country would have to forgone a certain amount of capital goods. Similarly it also applies to capital goods. A certain amount of consumer goods would have to be forgone to attain a certain amount of capital goods. In the long run if the country solely produces consumer goods, eventually the capital good will deteriorate and become obsolete. This will affect the quality and quantity of the consumer goods. This will result in the points to be inside the PPC curve. This will then affect the economy as whole as there will be underemployment where resources are insufficiently used. This will lead in to the decrease in the Gross Domestic Product (GDP). 

If a country were to increase its output in consumer goods, it will be for the purpose of short term profit. Whereas if a country were to increase its output in capital goods, it would be for the purpose long term continues growth.

PPC curve explanation Click on link for clarity.

BY: ALFIAN, DERRON, SHANE, LENNY