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Supply and Demand - Essay Example

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Name Professor Course Date Supply and demand Introduction Dr. Mukund Mahajan, in his knowledgeable book, “Managerial Economics,” records that supply and demand have to exist in equilibrium for harmony in the world of macro and microeconomics to sustain…
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Supply and Demand

Download file to see previous pages... Furthermore, the relationship between supply and demand among consumers and suppliers establishes through pricing. It is noteworthy to recognize that, in microeconomics, it is possible to neglect the effects of supply on the demand. However, within macroeconomics, it is not possible as within this field the changes in both supply and demand are immensely vital. Ultimately, this is so because the suppliers are able to act as consumers at the same time. In relation to the topic, the following paper includes an elaborate analysis and summary of supply and demand in various companies and the way they affect people. In an article from Forbes, Brad Thomas presents an interview of a legendary investor talking about the commercial real estate business. As the legendary investor, Sam Zell spoke he was keen to provide vital opinions of what the future holds as far as commercial real estate is of concern. Sam Zell meticulously gave a clear analysis of how demand and supply affected the business. The article clearly deduces that in the real estate, since the year 2007 has had drastic changes, which have had detrimental effects. The supply field involves bringing up more buildings for consumers to take up, but since 2007, this has not been happening. The demand is soon outweighing the supply as the population is also on an increase (Thomas, web). Within the same article, we learn that the supply is not affected by demand only. Other factors play a significant role, for example, in the commercial real estate, supply and demand are highly affected by things such as technology and unemployment among the citizens seeking affordable places of residence. In addition, the article speaks of factors fuelling an increase in demand, which in this case is the need for housing. On the other hand, various factors, such as economy, play a leading role in discouraging supply. The article also clarifies that, in the commercial real estate, office space demand is on a decline. This is a fact propelled by the decline in supply. Hence, the relation between supply and demand is on a common platform where each factor has an essential effect on the other. The article indicates that it was in the year 2009 when people within the commercial real estate were most distressed in the industry. However, since then the distress is on a regular decline and by now, it is at its minimal. Concurrently, as the distress is on a reduction, various factors still fortify it, such as expiring loan maturities and distressed assets. Ultimately, research from the same article indicates that, over the next few years, people within the construction and development industry will be quite inactive. This is a fact attributed to the equilibrium of demand and supply factors. Within yet another article from The Economist, titled “Risk permanent damage,” we witness of how the inability to determine the supply factor led to inflation and depression of the economy in America. The article gives clear evidence of over investments back in the 1930s, which led to economic depression. This is a true reflection of the aftermath of a change in the equilibrium of supply and demand (The Economist, web). In addition, making false estimates on supply may also lead to detrimental effects on the economy. Evidence proves that overestimation of supply policies resulted to extensive inflation in the America. In the article, a well elaborate example is when in the 1970s and 1960s, ...Download file to see next pagesRead More
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