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The Market Forces of supply and demand - Essay Example

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It specifies on the studying of the aggregated indicators such as prices indices of product so as to understand the main functions of the economy. It is getting people mind to like and trust one in the…
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The Market Forces of supply and demand
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These two inter-relates in a situation whereby the producer sells the same quantity of a goods and services that the consumer is willing and capable to purchase. Since a market is a combination of the producer (sellers) and consumer (buyers) of a specific goods and service, the force of demand and supply has been used in the economics to refer to the general behavior of the market participants (Caballero, Hoshi and Kashyap 1947). The main characteristics of a market are that all goods and services are the same and have got a large number of buyers and sellers to curb the effects brought by a single person over the market price.

In the economy, a market exists as a competitive field in which a variety of companies and business entities produce identical goods and service and strive to sell to their prospects. The type of market in operation maintains its’ existence in the economy because of their structure namely; a monopoly; which is a market structure where the market is controlled by one firm. Monopolistic competition is market where a variety of companies have a certain percentage of market share but they all differentiate their goods and service from each other to make them unique.

Perfect competition is a market structure that does not have a limited number of firms that have an entry. It is generally free entry for all interested buyers and sellers. Another market structure is the oligopoly that has its’ operations dominated by few firms and have total control over the majority in the market share. In cases where there two firms are dominating and has full control of the market share, it is referred to a duopoly. Unlike in a monopolistic market structure where we only have one provider, in a monophony market, there is only one person to purchase the products in the market (buyer).

In addition, there is a market structure

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