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The amount of a product that people in a market are willing to buy is known as the demanded quantity. The existing relationship between quantity demanded and price is known as the demand relationship. The factor of supply indicates the quantity of a product or a service that can be offered by the market. The quantity supplied is the amount of any good or service that the producers are able to supply in return of a certain price. The factor of price is a reflection of the demand and supply in the market. The supply and demand relationship underlines the key decisions regarding the allocation of resources in a market. In the theories of market economy, the demand and supply theory is used to allocate the available resources in the best possible manner.
The demand for a product is the representation of how much the buyers are willing to buy at different prices. Thus, demand can be defined as the existing relationship between quantity and prices while maintaining all other relevant factors as constant. The law of demand states that the higher the price of the goods, lesser would be the demand for the goods, if the other relevant factors are kept constant (Gomes, King and Stonecash 215). This means that a higher price would incur a lower demand. According to the law of demand, the factors of quantity demanded and price are inversely proportional. Therefore, a lower price would mean a higher quantity demanded. The market demand represents the total of the demands of all the individual buyers in a market. Since at a higher price, both the price and the opportunity cost of the purchase of the goods and services increase, therefore the amount purchased by buyers at high prices is lesser. People generally try to avoid buying any product or service that will make them forgo the purchase and consumption of a product more important to them. Thus, a high opportunity cost often leads to a decrease in
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Economists are in agreement that prices and quantities are descriptively the most observable attributes of individual interests that interact within a market structure to facilitate a mutually beneficial exchange as envisaged by Adam Smith (Friedman 145).
There are four primary laws of supply and demand. First, if demand rises and supply remains unaffected, there will be a shortage causing a higher equilibrium cost. Second, if demand lessens and supply remains unaffected, there will be a surplus causing a lower equilibrium cost.
The rising costs are an outcome of the general level of inflation in the countries of Europe. Many big companies, particularly those, that are conducting operations across several countries in the world are now carrying out researches aimed at weighing the probable influence of the theatrical increase in prices of crude oil on their businesses (Wilson, 1975).
On the other had human beings have unlimited wants. In a free market economy, the forces of demand and supply determine the market equilibrium and the prices are determined by the price system. When a country or a company has a comparative advantage compared to the other countries, producing a same good, the country which has the advantage can supply the good at a cheaper rate compared to the other countries.
The core intentions of any business venture are to supply the market with goods and services in the right quantities of demand;maximize profit and explore measures to necessitate growth and expansion.The process of growth and expansion is purely determined by the business’ performance over a given period of time;its ability to handle micro economic environment and match them with the macro economic factors,and the overall behavior and response of the market.Market forces on the other hand determine the quantity to be produced and supplied by manufacturers and retailers respectively,and depending with the industry that the firm is in, the overall business environment can be explicitly define
Using real world example, professional sports players are paid much higher than farmers, factory workers, engineers, and teachers even though all of them are generally in competitive markets.
In order to assess this situation, this paper will
Elasticity of demand has also been explained in the paper.
In economics, supply and demand are two important concepts that define the operations of a business. Demand for a commodity refers to the availability of ready market or
These are prices, speculation, government policies, tastes and preferences, and changes in income.
Supply and demand in economics are two concepts, which carry a lot of significance as they determine the
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