Law of Demand and Supply, Economics

Law of Demand and Supply,
One of the most important areas of study in business economics is the market.  Producers produce for the market where interaction between demand and supply of a product determines its price.
Law of Demand Meaning
Meaning
The terms demand for product denote the quantity of it consumer or a group of consumers  are willing to purchase at a given price at a given time

Definition
1)It repairs a commodity backed by the ability and  willingness to purchase it. 

 2)The measurable concept is always with rel period.  Always with reference to a price and time

Law of Demand
  The demand for a commodity depends on factors.  The most important factor determining demand is the price of the commodity.  There are many other factors that will have an impact on demand. 

Law of Demand  example, the demand for Yuvraj 215, a type of small tractor sold by Mahindra and Mahindra, at a given period of time, will depend on several factors like, or.  
(a) Price of Yuvraj 215 
(b) Price of other similar tractors hesariusnet 
(c) Cost of fuel to run the tractor 
(d) The interest rate farmers have to pay the loan taken on loan to purchase the tractor 
(e) The income level of the  farmers 
(1) The advertising and promotion of the tractor |  (g) The geographical conditions in which the tractor will be used

 If we assume that all factors, except the price of the tractor, remain the same, we can then derive a functional relationship between the demand for the tractor and its price alone.  This relationship is explained with the help of the Law of Demand which was first propounded by Alfreal Marshall.
        The Law of Demand states that other factors being constant (ceteris paribus), price and quantity demanded of any commodity are inversely related to each other.  When the price of a commoditurises the demand commodity will fall. 

 1.  Alfred Marshall (1842 - 1924) was one of the most influential Neo-Class economists.  His book, Principles of Economics (1890) was an important which Marshall brought out the analysis of demand marginal utility consumer's surplus and costs of production.  

The law of demand explain how the consumers choice behaviour changes when there is a change in the price of commodities in market situation if other factors affecting demand for commodities does not change but only the price change then consumers like to buy more of it commodities when the price falls and less of commodity.when its price rises this behaviour of consumer is commonly observed behaviour and law of Demand is based on such observed behaviour

{ The law of Demand and marketing strategy-:when seller announce discount sale and popularized offer like buy 1get 1free they are applying the law of demand to other marketing strategy however it real life situations price is not only dynamic factor they may be changes in the other factor too.like a rival firm may also announced similar discount sale or may product out of fashion and people not buy more evan the discount price this are the real world challenges that firm face overcome the limitations of law of demand such changes to met to effective advertising and promotion of carrying out product innovation along with price variation }

The law of demand, i.  e. the inverse relationship between the price and the quantity demanded of a good, is explained through the demand curve in Fig.3.1
The most basic laws in economic science at the law of provide and therefore the law of demand.  Indeed, almost every economic event or phenomenon is the product of the interaction of these two law of supply and demand explains the interaction between the supply of and demand for a resource, and the effect on its price.
LOW OF DEMAND
in Fig.3ldd caption.1 price is measured vertical axis and quantity demanded on the horizontal axis the line DD is a demand curve it slopes downward from left to right is shown an inverse relationship between the price and quantity demanded

THE LAW OF SUPPLY
'Supply refers to a commodity of quantity that producers or sellers are willing to produce and offer for sale at a particular price', in a given market, at a particular period of time

The three important aspects are Law of Supply.
 • Supply is a desired quantity
 • Supply is always explained with reference to price 
• Time during which it is offered for sale

The law of Supply graphically explain as below.
The most basic laws in economic science at the law of provide and therefore the law of demand.  Indeed, almost every economic event or phenomenon is the product of the interaction of these two law of supply and demand explains the interaction between the supply of and demand for a resource, and the effect on its price.
Law of Supply 
SS Slopes upward from left to right.  It shows the positive relationship between the price of the commodity and its quantity supplied.  As price rises quantity supplied also rises.

Assumptions of the Law of Supply 
• There is no change in the prices of the factors of production.
 • There is no change in the technique of production.  
• There is no change in the goal of the firm.  
• There is no change in the prices of related goods.  • Producers do not expect changes in the price of the commodity in the near future.



CHANGES IN MARKET EQUILIBRIUM

  CHANGES IN MARKET EQUILIBRIUM
Once the market equilibrium price is determined, it may change either due to the demand in nanges or supply or both.

Change in market equilibrium Demand
 Demand may change when there is change determines demand other than price such changes in result upward and downward shift in demand curve indicating and increasing or a decrease in demand as demand curve as demand curve shift, so will the market equilibrium.
 In Fig 2.6(a) DD is initial Demand Curve. Equilibrium price is OP when demand decreas to D1D1, with no change in supply,price fall's From OP to OP1 In Fig 2.6 the initial price is OP Demand increase From DD to D2D2 with no change in Supply, price rises to OP2
**equilibrium** | understand in a market setting, an equilibrium occurs when price has adjusted until quantity supplied is equal to quantity demanded identify how to change market equilibrium. **equilibrium price** | understand the price in a market at which the quantity demanded and the quantity supplied of a good are equal to one another; this is also called the “market clearing price.
Change in market equilibrium Demand
Change market equilibrium in Supply 
  Supply may change when there is a change in the supply of non-price determinants.  Such changes will result in a decrease or increase in the supply curve moving to the left or to the right, respectively (as discussed in Table 2).  As the supply curve shifts, so will the market equilibrium.  
      In Fig.  2. 7 (a), the initial equilibrium price is OP.  Supply decreases from SS toSS. With no change in demand, price rises from OP to OP1 and quantity falls from OQ to OQA.  In Fig. 2.7 (b), the initial equilibrium price is OP and quantity is OQ. Whensupply increases from SS to S2 S2 the price falls from OP to OP2 and quantity rises to OQ2.
**equilibrium** | understand in a market setting, an equilibrium occurs when price has adjusted until quantity supplied is equal to quantity demanded identify how to change market equilibrium. **equilibrium price** | understand the price in a market at which the quantity demanded and the quantity supplied of a good are equal to one another; this is also called the “market clearing price.
Change market equilibrium in Supply 

Change market equilibrium in both Demand and Supply 
All time be simultaneous changes in both demand and supply in such as situation in the change equilibrium price of depend upon the relative magnitude of the change in demand and supply.
**equilibrium** | understand in a market setting, an equilibrium occurs when price has adjusted until quantity supplied is equal to quantity demanded identify how to change market equilibrium. **equilibrium price** | understand the price in a market at which the quantity demanded and the quantity supplied of a good are equal to one another; this is also called the “market clearing price.
Change market equilibrium in both Demand and Supply 
In Fig.  2.8 (a), the initial demand curve is DD and the supply curve is SS.  The equilibrium price is OP. Both demand and supply increase by the same magnitude.  So the price remains the same, but the quantity increases from OQ to OQ1.
      In Fig.  2. 8 (b), the original equilibrium price is OP.  Demand increases to D1D1 and supply decreases to S1S1  Asa result price rises from OP to OP1.

Demand and Supply Economics

INTRODUCTION OF SUPPLY AND DEMAND 
     One of the most important areas of study in business economics is the market.  Producers produce for the market where interaction between demand and supply of a product determines its price.  The price of a product and its sales determines the total revenue, from which the total cost is deducted to arrive at a firm's profit or loss.  A business enterprises, success and failure depend on what price the market sometimes Tor its product. In a market situation, price is determined by S11 Full explained Demand and Supply Economics.
(a) the demand for the product;  and
 (b) the supply of the product on the equilibrium 
  price of a product is the price which itself, that is, at this price, the demand for the product supply.  Every market tends to settle at this equilibrium] understand market equilibrium, we need study mar e price at which the market clears or the product is exactly equal to its equilibrium price at this settlement.  In orde need study market demand and supply.
  1.   DEMAND ECONOMICS
     In economics, demand signifies a desire for a good or a service backed by the ability and willingness to buy a good or service.
     Demand for a good or a service is a function of its price, consumers Income, taste and preferences.  size, population, prices of substitute and complementary products, natural, geographical and social factors.  These factors are termed as determinants of demand.  Of all the determinants, price is the most important.  As such, the relationship between the quantity demanded of the product and its price is studied under demand analysis.  Demand analysis is the starting point of understanding the functioning of the market.
   The relationship between price and demand is an inverse, assuming that the demand for other determinants remains constant.  According to the law of demand, amount demanded varies negatively, or reciprocally, with the value. A demand curve slopes downward because any reduction in price makes consumers;  

(a) more willing to substitute the commodity for other commodities (substitution effect) and 
(b) more able to buy the good because the lorwer price increases real income.

    The quantity demanded of a commodity is always expressed in relation to a price and time period.  For example, 200 pairs of shoes sold at a price of 1500 per pair in a month by a shoe store.  

1.Demand Schedule and Demand Curve               According to the Law of Demand, if we assume that all factors, other than price, remain constant, we can derive a price-demand relationship in a functional form.
     A demand function for price can be expressed as 
Qdx = f (Px)
   Where, Qdx = Quantity demanded of commodity x
P = Price per unit of commodity x

 f denotes a functional relationship 

The linear form of the ion in can be expressed as: 

The above demand has the demand function in ali Qdx = a - b Px.  
     General Chat Chat Lounge  quantity 

where, 
a=quantity demanded when the price is zero

 b = correlation coefficient between and proficient between quantity demanded and price in the above equation,

1) a represents quantity.  Known as the intercept quantity demanded at zero price.  It is a constant and is the intercept parameter. The Demand curve will intersect ecause the X - axis at quantity.
2)  The term b represents ∆Qdx / ∆P.  Note that the inverse relationship between the will benoir between supply and quantity demanded
 Let us suppose, the demand equation is estimated as: 
Qdx = 100 - 10P, 
from the above equation; we can derive the following demand schedule:
Demand Schedule

PRICE PER UNIT
Quantity Demanded in Unit
(Qdx = 100 - 10P)
0
100
1
90
2
80
3
70
4
60
5
50
6
40

The schedule indicates the demands inverse price - demand relationship. A demand curve can be derived A demand by plotting the points on a graph. In the above example, the demand curve is linear, but the demand curve can be linear.
But demand curve can also be non be nonlinear.
Explain Demand curve

Understanding Supply and demand, in economics, the relationship between the quantity of a commodity that producers wish to sell and the quantity that consumers wish to buy.and Law of Supply and Demand.
Demand Curve

2.  Individual and Market Demand
 In the above example, the demand curve is an individual demand curve representing the demand of an individual consumer.  If we sum up the demand for a product of all consumers, we get the market demand curve.

    Changes in Demand
Movement along the demand curve: When the price of product changes, with no change in the demand of other determinants, it can be shown by movement on the same demand curve.  Thus, other things remaining constant, if the price falls, the quantity demanded will rise (extension of demand) and if the price rises, quantity demanded will fall (contraction of demand).  (refer Chapter 3).  

  Shifts in the demand curve: 
    The demand curve will shift upward (to the right) or downward (to the left) when there is a change in the demand of non-price determinants.  For example, if consumers income increases, then there will be an increase in demand at the same price and the demand curve will shift upward.  On the other hand, for example, there is a decline in consumers' income, there will be a decrease in demand at the same price and the demand curve will shift downward.  Similarly, other non-price factors can cause gifts in the demand curve.

Market Demand In Fig.  2. 2DDI At the same pric dentand.  Atthe Hot Demand and Supply Mpp is the initial demand cure Hame price Pr more is demand.  A. Arthe same price Pr, lessisdem Acurve, DD shows increase in demand. demanded (= OQ). DD shows decrease in Messisdemanded (300).

 In Fig 2.2 DD is the initial demand curve D1D1 show increase in demand at the same price p1 more is demand ( =OQ1),D2D2 decrease in demand at the same price P1,less is demanded ( =OQ2)

Understanding Supply and demand, in economics, the relationship between the quantity of a commodity that producers wish to sell and the quantity that consumers wish to buy.and Law of Supply and Demand.
Initial Demand Curve

2. SUPPLY ECONOMICS
Supply refers to the commodity of various quantities that a producer will offer for sale at different times at different relevant prices.  The most important anal derivative of the Law of Supply is the governance of prices, related goods, cost infrastructure. A commodity depends on a number of factors such as its price, leased goods, cost of production, state of technology, time period, Acture, government policies, natural factors.  Of all the factors, price an important and hence, the price - supply relationship is used to
The relationship between price and supply is direct, assuming Minidirect.  Assuming that the supply of other determinants remains constant.

Supply Schedule and Supply Curve 
    As per the Law of Supply.  If we assume that all factors, other than price remain constant, we can derive a price - supply relationship in a functional form. 
 A supply function for price can be expressed as Qsx = f (Px) 

Where, Qsx = Quantity supplied of commodity x
Px= Price per unit of commodity x
 f= denotes a Functional relationship

 The above supply function can be expressed as a Qsx = -  c + d Px

 where c= quantity supplied when price is zero 
d = correlation coefficient between quantity supplied and price 

In the above equation,
 i) c = quantity supplied at zero price (c represents quantity intercept of | supply curve. It will  Always be negative since ata price of zero, no | producers are willing or able to supply a product) 
(ii) The term d representsAQ.  General Chat Chat Lounge JAP, note that d will be positive because |  of the direct relationship between price and quantity supplied.
  Let us suppose, the supply equation is estimated as:
                   Qsx = - 40 + 30P

From the above equation we can derived by following supply schedule

PRICE PER UNIT
Quantity Supply in Unit
(Qsx =  - 40+30Px)
0
-40
1
-10
2
20
3
50
4
80
5
110
6
140

The schedule indicates the direct price - supply relationship.  A supply curve can be derived by plotting the points on a graph.  In the example above, the supply curve is linear, but the supply curve can also be non-linear.  (The Supply curve can be extended to the negative axis, as at zero or very low price, no quantity will be supplied, unless the commodity is subsidized by the government.) Fig.  23explains is a representative supply curve.

Explain Supply curve
Understanding Supply and demand, in economics, the relationship between the quantity of a commodity that producers wish to sell and the quantity that consumers wish to buy.and Law of Supply and Demand.
Supply Economics Graph

  Individual and Market Supply Curve
 In the above example, the supply curve is an individual firm's supply curve, it sums up the supply of all the producers of the product in the market, we get the market supply curve.

  Changes in Supply
a. Movement along the Supply Curve: 
When the price of a product changes, with no change in the supply of other determinants, it can be shown by movement on the same supply curve.  Thus, if other things remain constant, if price falls, producers will supply less (contraction of supply) and if the price rises, more will be supplied (extension of supply).  (Fig. 2. 3)
 b.  Shifts in the supply curve:
 The supply curve will shift to the left or to the right when there is a change in the supply of non-price determinants.  For example, if material costs rise, producers will have to cut down on production.  Therefore, at the same price will be less supplied and the supply curve will shift to the left or supply will decrease.  On the other hand, if for example, there is a fall in material costs, then producers will be able to supply more at the same price.  This will make the supply curve move to the right or there will be an increase in supply. Similarly, other non-price factors can cause shifts in the supply curve.  (Fig. 2. 4)
Understanding Supply and demand, in economics, the relationship between the quantity of a commodity that producers wish to sell and the quantity that consumers wish to buy.and Law of Supply and Demand.
initial supply curve 

In Fig.2.4 SS is a initial supply curve S1S1 decrease in supply at the same price P1 Less in supply( =OQ1),S2S2 is increased in supply at the same price P1 more is supplied (=OQ2)



TOOLS FOR ECONOMIC ANALYSIS

FUNCTIONAL RELATIONS AND TOOLS FOR ECONOMIC ANALYSIS 
        Economic analyses are based on looking for relevant cause-effect relations between different variables and then taking decisions on the basis of the analyses. Some of the important concepts and tools of economic analysis are discussed here. 
TOOLS FOR ECONOMIC ANALYSIS

1. VARIABLES TOOLS FOR ECONOMIC ANALYSIS 

      Economic theories and models are constructed to explain economic activities. An economic model is a simplified representation of real world phenomena. For example, the Law of Demand is used to understand the relationship between price and quantity demanded. 

        Since the real world is extremely complex and ever changing, it is necessary to build a model with some restrictions or assumptions, to understand the relationships between different variables that matter. A variable is a magnitude of interest that can be defined and measured. In other words a variable is something whose magnitude can change or can take on different Variables.
frequently used in business economics are price, profit, revenue, cost, investment. Since each                     variable can have different values, it Is represented by a symbol. For instance price may be represented by P, cost by C, and so on. 
      Variables can be endogenous and exogenous. An endogenous variable may be a variable that's explained inside a theory. An exogenous variable influences endogenous variables however the exogenous variable is itself is set by factors outside the idea. For example, the theory of value helps to determine the equilibrium price with the help of demand and supply curves, In this model, price and quantity demanded and supplied are endogenous variables as they are within the model or they are controllable variables in the model. When price changes, the respective quantities also change in response. But there are other factors that determine demand and supply. Some of these are consumer preferences, prices of related commodities, input costs, advertisement, government policies and so on. These are exogenous variables as they are outside the model but they also have an influence on price, demand and supply.

2.FUNCTIONS TOOLS FOR ECONOMIC ANALYSIS

  FUNCTIONS TOOL A operate shows the link between 2 or additional variables. It indicates how the value of one variable (i.e. dependent variable) depends on the value of one or more other (i.e. independent) variables. It also shows how the value of one variable can be found by specifying the value of other variable. 
    For instance, economists generally link the volume of consumption by the households to the receipts of disposable income (income left after deduction of taxes and addition of transfer incomes like pension, subsidies). Such behaviour is specified by saying that consumption is a function of disposable income. This functional relationship between consumption and disposable income can be expressed as 

    C=(f)Y

where C is aggregate consumption, Y is disposable income and f stands for the functional relation. This functional expression means that aggregate consumption depends upon the disposable income. Similarly, in business economics, functional relations between the price of a commodity (P) and quantity demanded (Q) can be expressed as Q= f (P).

3. EQUATIONS TOOLS FOR ECONOMIC ANALYSIS

     The expression Q=f(P) states that Q is related to P. It says nothing concerning the shape that this relation takes,
An equation specifies the relationship between the dependent and price and quantity demanded can take different forms. The specific independent variables. For instance, the functional relationship between relationship between two or more variables is specified in the form of an equation 

For instance the function Q= f (P) can be expressed in a simple equation as
 d9- =0             …...(1)

Where, b is a constant and it has a value greater than zero but less than one. Thus the equation (1) shows that Q is a constant proportion of price. For example, if b is 0.5 then the quantity demanded would fall by 0.5 for y unit rise in price. The negative sign indicates the inverse relationship every between price and quantity demanded. The equation (1) also shows that if price is zero, quantity demanded will also be zero. 

The function Q = f (P) can also be expressed in the form of an alternative equation as
 Q = a - bP ...(2).

where a and b are parameters and have values greater than zero. The equation (2) also shows that quantity demanded is an inverse linear function of price. The coefficient a denotes quantity demanded at zero price. The parameter a has a positive value and is independent of price. When price 1S zero, bP will be zero, but quantity demanded will not be zero but will be equal to a. In the above equation, b measures the slope of the demand curve. It is measured as ∆Q/∆P. The demand curve has a negative slope, hence the negative sign. 
Therefore, equations specify the functional relationship between dependent and independent variables. Each equation could be a brief statement of a specific relation.

4. ECONOMIC DATA AND TOOLS TOOLS FOR ECONOMIC ANALYSIS

   Economists make use of evidence to test the relevance of a specific prediction of theories and models. They also try to explain, analyse and predict observed real world economic behaviour of people. To analyse economic issues and the relationship between variables economists use data relevant, quantifiable it absolutely essential for making business decisions. 

Tools for Economic Analysis 
The relationship between variables can be expressed either in words, in numerical schedules or tables, in mathematical equations, or in graphs. For example, the relationship between the quantity supplied of a commodity and its price can be expressed in the following ways: 

(i)A sentence explaining the direct relationship

(ii) A supply equation Qex = -c + dPx %3D 

(iii) A table giving different levels of supply at different prices

(Iv) An Upward rising curve with price on the Y-axis and supply on the X- axis.

5. GRAPHS TOOLS FOR ECONOMIC ANALYSIS

 Graphs are geometrical tools used to express the relationship between variables. Graphs are essential in economics because they allow us to analyse economic concepts and examine historical data. Business economics makes extensive use of graphs to analyse economic relations.
 A graph is a diagram showing how two or more sets of data or variables are related to one another.

The details to grasp a couple of graph square measure :
(i) The horizontal line on a graph is referred to as the horizontal axis, or sometimes the x axis. The vertical line is known as vertical axis or y axis. 

(ii) The lower left hand corner where the two axes meet is called the origin. It signifies 0. 

(iii) The variables are represented on the two axes. 

(v) The kind of relationship between the variables on the axis is depicted in the curve or curves shown in the graph. For example, if the relationship between the variables is inverse, then the curve will be downward sloping or will have a negative slope.


6.CURVES TOOLS FOR ECONOMIC ANALYSIS

The functional relationship between the variables specified in the form of equations can be shown by drawing lines in the graph. The line depicts the relationship between the variables. For instance, the relationship between consumption and income shown in equation (2) is expressed by drawing å line as in Fig. 1.1.
The functional relationship between the variables specified in the form of equations can be shown by drawing lines in the graph

The line CC, is a straight line and has a positive slope. It shows that aggregate consumption is positively related to aggregate disposable income. It shows that an increase in disposable income will lead to an increase in consumption. In this case the relationship between the variables is direct. Direct relationships occur once variables move within the same direction, that is, they increase or decrease along. On the other hand, inverse relationships occur when the variables move in the opposite direction.

7.SLOPES TOOLS FOR ECONOMIC ANALYSIS

  One important way to describe the relationship between two variables is Slope of a line Slopes show us how fast or, at what rate, the dependant variable is changing in response to a change in the dependent variable. By looking at the slope of the line we can quantify the average relation between the variables. The slope is defined as the amount of change in the dependent variable measured (usually on the vertical or Y-axis) per unit change in the independent variable measured)
 ( Usually horizontal or X-axis). Therefore, the slope is equal to ∆Y/ ∆X, where 

Y is the dependent variable; X is the independent variable and delta (∆) stands for a change.

Inother words, the slope is an exact numerical measure of the relationship between the change in Y and the change in X. For instance the slope of a demand curve is measured as 

∆Q/∆P. (Though In most cases, the dependent variable is represented on the vertical axis and the independent variable is represented on the horizontal axis, the notable exceptions to this convention are the demand and supply curves, in whose case it is the reverse) 

(a) Slope of a Straight Line : The measurement of slope of the straight| (Linear) line is shown in Figs. 1.2 (a) and 1.2 (b).
The measurement of slope of the straight| (Linear) line is shown in Figs.
The movement of A to B on the lines DD1
 and SS1 in Fig. 1.2 (a) and 1.2 (b) may occur in two stages. First there is a horizontal movement from A to C, indicating one unit increase in X. Second, there is a corresponding vertical movement up or down from C to B. The length of CB indicates the change in Y per unit change in X. Thus, the slope measures the change in Y per unit change in X. Since in Fig. 1.2 (a) and 1.2 (b) BC corresponds to change in Y (∆Y) and ∆C corresponds to change in X (∆X) the slope of the line ∆B is ∆Y/∆X.

In Fig. 1.2 (a) the two variables change in opposite directions, that is, when one variable increases the other decreases. So the two ∆s will always be of opposite sign. Therefore, their ratio, which is the slope of the line DD1 is always negative.

In Fig. 1.2 (b) the two variables change in the same direction. So both changes will always be either positive or negative. Therefore, their ratio, which is the slope of this line SS1 is always positive.

If the road is straight its slope is constant all over.
The slope of the line indicates whether the relationship between the two variables is direct or inverse. The relationship is direct when the variables in the same direction, that is, they increase or decrease together. Thus a positive slope indicates a direct relationship as in Fig. 1.2 (b). On the other hand, the relationship is inverse when the variables move in opposite directions, that is, one increases as the other decreases. A negative slope indicates the inverse relationship as in Fig. 1.2 (a).

 (b) Slope of a Curved Line : A curved or a non-linear line has different measurements of slope at different point: 

Measurement of slope of a curved line is shown by drawing a dome shape curve as in Fig. 1.3.

Measurement of slope of a curved line is shown by drawing a dome shape curve

The curve ABCDE in Fig. 1.3 increases initially, reaches a maximum point at Cand then declines. The slope of the curved line at a point is given by the slope of the straight line, that is, tangent drawn to the curve at the given point. For instance, if we want to find out the slope or the curve at point B we have to draw a straight line t1 t1 as a tangent to the curve at point B. By calculating the slope of the straight line t, t, we can find out the slope of the curved line at point B. We can see from
 Fig. 1.3 that it has a positive slope. Similarly, we can find out the slopes at different points by drawing tangents to respective points.
    For instance, we can find out the slopes at the C and D by drawing Bents t3t4 and t5 t6 respectively, It can be seen from the Fig. I. hat the slope of the curve is positive in the rising region from A to C and negative in the falling region C to E. At the maximum point of the curve, that is, at point C, the slope is zero. A zero slope indicates that a small change in the variable X around the maximum point of the curve has no effect on the value of the variable Y. 
Similarly, A We can also find out the slopes of a"U" shaped It's slopes curve"U" fashioned I curve initial falls, reaches a minimum purpose thus rises.  can be found out by the same technique as shown in Fig.

1.3, that is, by the slopes of the tangents drawn to the curve. In the falling region the slope of the curve is negative and in the rising region the slope is positive. At the minimum point of the “U" shaped curve the slope is zero.

(C) Intercepts : The intercept is the point at which the line or the curve crosses the vertical axis. In other words it is the height of the graph where the line crosses the vertical axis. In Fig. 1.1 at point C the line CC, crosses the vertical axis. In other words OC is the height of the vertical axis where the line CC, crossed the vertical axis. Therefore, OC is the intercept. It shows the value of consumption when income is zero.

In the equation, C = a1 + a1Y 

a1 is the intercept i.e. the value of C when Y is zero. There can be vertical and horizontal intercepts. The vertical intercepts shows the value of Y variable when X variables is zero. On the other hand, the horizontal intercept shows the value of X variable when Y variable is zero