We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

An about the supply and demand - Essay Example

Comments (0)
Supply and Demand Introduction Supply and demand are two of the most important and fundamental principles of economics. Supply is the terminology that defines the quantity of goods and services that producers and manufacturers are willing to avail to the market…
Download full paper
An essay about the supply and demand
Read TextPreview

Extract of sample
An about the supply and demand

Download file to see previous pages... In order to maximize profit, suppliers have to sell their goods and services at high prices but this has to consider the purchasing power of the intended market. This paper is a critical evaluation of supply and demand as principles of economics. Concepts of Supply and Demand The Law of Demand The law of demand states that the higher the price of a commodity, the lower the quantity demanded cateris paribus, while the lower the prices the higher the demand (Fisher 36). Cateris paribus in this case implies that all other factors that influence demand are held at a constant. These are for example weather, taste and preferences, income among others. This is due to the fact that the law of demand is basically dependent on two variables i.e. quantity demanded and price. The following diagram is a demand curve, which is a graphical depiction of the law of demand. Fig 1 From the diagram, it can be noted that the quantity demanded was highest, (Q3), at the lowest price, P1, while it was lowest at price P3, which was highest. However, it is important to note that not all goods abide by the law of demand. These are for example giffen goods and products that act as status symbols. Giffen goods are defined as inferior commodities whose demand goes up with rising prices while the vice versa is also true (Baye 42). Inferior, in this context, does not necessarily imply that the goods are of poor quality. For example, if the staple food in a family is rice, products such as meat may be perceived as superior. If the price of rice goes up, it would be normal to find people buying more rice and less of meat and when the prices go down, more meat is bought in comparison to rice. The two goods are not substitutes and in this case, it is assumed that the consumer can afford both items therefore eliminating opportunity cost. On the other hand, status symbols are goods whose value creates a perceivable higher social standing in the society (Gorman 29). For example, if the price of a Mercedes Benz makes it unaffordable for the common market as opposed to that of a Toyota sedan, then, any person owning a Mercedes would be perceived as having an economic advantage over the owner of a sedan. It therefore goes without saying that a reduction in the price of a Mercedes would make it lose its value as a status symbol and that would definitely make it lose its demand to other more expensive and luxurious vehicles. On the other hand, an increase in its price would increase its value as a status symbol thus increasing its demand thereby defying the law of demand. Movements along a Demand Curve versus Shifts in Demand Curve A movement along a demand curve is dependent on one variable only which is price. From the diagram below, DD1and DD2 represents the demand for a commodity, with prices plotted on the Y axis while quantity demanded on the X axis. DD1 will be used to illustrate movement along a demand curve while DD2 illustrates a shift in a demand curve. Fig. 2 On the DD1 curve, it is notable that when the price was at p1, the quantity demanded was highest at Q3. However, after the prices increased to p2 and p3, the quantity demanded moved to the lower side i.e. from Q3 to Q2 and Q1 respectively. However, the demand curve shifted entirely to the right as a result of an increase in income. Notice that prices p1 to p3 remained static but still, the quantity ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Is it possible to overcome Euthyphro's Dilemma Explain
However, Adam committed the first wrong thing in this universe by violating the instructions of God and eating the fruits of the prohibited tree. Even though Satan and his wife persuaded him in doing so, his act is still believed as the first sin in this world.
8 Pages(2000 words)Research Paper
Supply and Demand
Dr. Mukund further elaborates that a change in the equilibrium of supply and demand of money often results to a drastic change in the balance between supply and demand of commodities. Within the same field of economics, the supplier and consumer are vital in the equilibrium of supply and demand of both money and commodities (Mahajan Mukund 23).
8 Pages(2000 words)Essay
Demand & Supply
Ceterus paribus is an omnibus assumption and holds all other factors which might influence consumer's demand as constant for the purpose of analysis. These factors may include income of the consumer, tastes of the consumer, impact of fashion and style, peculiar consumer characteristics like miserliness, scarcity of good and other choice patterns in consumer behaviour.Under these assumptions the price and quantity demanded are shown as inversely related and the graphical representation of consumer data in this scenario results in a downward sloping demand curve.
2 Pages(500 words)Essay
Supply and Demand Theory
Marshall's theory of demand and consumer surplus is to be understood within this context, as are criticisms, or critiques, of it. To understand Marshall's conceptualization of the demand curve and consumer surplus, it is necessary to understand his theory of supply and demand and his classification of markets.
7 Pages(1750 words)Essay
Supply Chain Management Master Essay
This essay focuses on this particular aspect explaining the facts about both Core competencies of the firms and Supply Chain Management with examples. The Core Competencies of the corporation is an article written by C.K. Prahlad and Gary Hamel in the year 1990.
8 Pages(2000 words)Essay
Demand and Supply Essay
The Law of demand states that there is a negative relationship between price and demand. This means that whenever price increases quantity demanded falls and when the price fall quantity demanded decreases. The quantity demanded depends not only on price but also on other factors as well.
5 Pages(1250 words)Essay
Supply and Demand Essay
Then the basis of pricing in each market is discussed. The demand-supply gap is then discussed. In a sellers market, pricing of oil is done through three main aspects viz- Value of equivalent human energy, Sustainable energy creation costs, Affordability of the least rich marginal consumer.
4 Pages(1000 words)Essay
Demand and supply
Whereas any change is quantity purchased by consumers in response to a change in price is called a change in ‘quantity demanded’ for the product, causing a shift to
6 Pages(1500 words)Essay
Persuasive Essay on Supply and Demand
(Benjamin Pimentel, 2012) In mid-2012 Facebook, Zynga and Groupon faced declining share prices, Facebook experienced a sharp fall of 47% in share price from its IPO price in mid-may, whilst Groupon has faced a decline of 68% in it’s last 1 year
2 Pages(500 words)Essay
Demand & Supply
Experts are of the opinion that in order to bring sustainability in the market it is important for the builders to build quality homes so that the demand is adequately met by the builders. The lack of
5 Pages(1250 words)Essay
Let us find you another Essay on topic An essay about the supply and demand for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us