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.

Macroeconomic concepts of Supply and Demand - Essay Example

This essay provides a brief introductive overview of the most basic principles of economics, namely the law of supply and demand. The demand of a product can be defined as the amount of a good that the market desires. The supply on the other hand is the amount of a product that a company can produce.
The price of a good is originally determined by the company, but based on the law supply and demand the price of the product will adjust accordingly. The basic premise of this concept is that when the price increases its demand will go down. If the price of a good decreases the demand of that good will rise. Businesses use this law in order to make pricing decisions.
The law of supply and demand can be used to determine the right pricing for a new product. When a product enters the market at a price that is too high customers will not purchase the item.
The normal form of the supply and demand curve has a downward slope. Each point on the curve reflects a direct correlation between quantity demanded (Q) and price (P) Time does not affect the demand, but it does affect the supply. Suppliers cannot keep up with instant pricing decisions because there is a delay in reaction time to the market. When the supply and demand of a product are equal the economy is in equilibrium.
The allocation of resources is optimized by the law of supply and demand. Without this law companies would not know how much to produce and their pricing structure would be arbitrary. Another phenomenon that occurs in the supply

Check these samples - they also fit your topic

Supply & demand & elasticity issues. Theories of the firm. Macroeconomic issues
As it is shown, much of conventional analysis within microeconomics is centered on the classical firm and its objective of profit maximization. The paper analyses the premises, which underline this objective to understand their relevance,as of today. Important microeconomic theories are discussed in the context to reflect upon their utility.
16 pages (4000 words)Essay
Concepts of Supply and Demand
The first economic determinant o f supply and demand which will be analyzed is that of the elasticity of demand. This term most closely relates to the demand for something that is driven and provided for by the changes in the item price (Khan, 2012). In other words, the willingness of the buyer to seek the given good or service is a direct and measurable result of the pricing at which the given item is offered.
10 pages (2500 words)Essay
The theory of supply and demand
This results in the emergence of an economic equilibrium for both quantity and price. Considerations of the power of supply and demand within the market date as far back as the 14th century. This paper will consider the subject of supply and demand, discussing its inherent provisions and assumptions.
3 pages (750 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 in baseball
For instance, economics may be seen in action in the field of sports like baseball, which after all is a big business. This paper discusses how the basic economic principles operate within the framework of professional baseball. It tackles how prevailing conditions, such as rising ticket prices, skyrocketing salaries of players and competitive balances among teams, have an impact on the supply and demand concepts.
6 pages (1500 words)Essay
Supply and Demand Simulation_365
6) because; demand is an internal issue that the Good Life firm has control over, where the firm can do advertising to attract potential clients to rent their property. The reasons for selecting these two concepts are because, in the simulation, the opportunity cost entails
3 pages (750 words)Essay
Aggregate demand and aggregate supply
Real values of GDP are adjusted for inflation, but nominal values of GDP are not so adjusted, and therefore the nominal GDP may appear to be higher than the real GDP. Real GDP refers to the total market values of the outputs measured in constant prices, but not
3 pages (750 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
A macroeconomic Theory of the Open Economy, Supply and demand for Loanable Funds and for Foreign-Currency Exchange
Money from all the institutions meet and enable the conduction of economic activities (McConnell, Campbell, Brue and Stanley 96- 122). Those entities that save as the consumers, provide the loanable funds to the
15 pages (3750 words)Essay
Case analysis: Macroeconomic concepts
The main macroeconomic concepts highlighted in the article include are aggregated demand, business environment and business cycle. Aggregated demand is applied with the reference to consumer confidence since the later is determined by the total cost of services and goods demanded by the consumers.
1 pages (250 words)Essay
and demand curve is disequilibrium.
Another phenomenon that occurs in the supply and demand curve is disequilibrium. Disequilibrium occurs when the price or quantity is not equal. The supply and demand curve can have shifts or movements. In order to better visualize these two concepts better Appendix A and Appendix B illustrate shift and movement in the supply and demand curve in graphical form. Movement occurs when there is a change in both price and quantity demanded. As illustrated in Appendix A, movement is represented from the change from point A to point B. Even when a movement occurs the demand and supply relationship remains consistent. A shift is different because it occurs when the supply or demand changes, but the price of the good stays the same. In Appendix B the shift is represented in line D1 and line D2. The law of supply and demand is an extremely important concept that all students of business or economics must understand. Its application affects the behavior of all businesses that sell goods or services since everyone must establish a price for their products. Companies that do not take into consideration the implications of the law of supply and demand will be negatively impacted. For example an American company decides to develop a new product. This product is priced at $100 without taking into consideration the law of supply and demand. The firm did not take into consideration that a Chinese firm offers a similar product for half the price. Due to market circumstances the price of the American firm is not viable. The firm will not sell many units at the $100 price. Based on the law of supply and demand the company must adjust its price downwards if it wants to obtain revenues from its new


This essay talks about the fundamental concepts of the economic theory, which are the notions of supply and demand. The law of supply and demand is so important that many economists considered it the backbone of the economy. The key factor that affects the behavior described in the law is price…
Macroeconomic concepts of Supply and Demand
Read TextPreview
Comments (0)
Click to create a comment or rate a document
Let us find you another Essay on topic Macroeconomic concepts of 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