Market Forces: Demand and Supply - Case Study Example

It is evidently clear from the discussion that market forces imply market demand and supply conditions, which might also be jointly identified as the backbone of a market economy. These demand and supply forces originating from the buyer and the seller sides respectively, together yield the equilibrium quantity and price. Market forces answer the question of how the buyers and the sellers interact with one another and eventually how an optimality situation is reached in an economy. There are two main components of market forces, viz.

, market demand and market supply. The following sections deal with the properties of these two forces and the factors which affect their normal regime. The discussion will be in line with the case of the popular food brand of Heinz, so as to elaborate how smoothly might a firm operate in a market, the obstacles that it faces through its journey as well as the rewards it enjoys by virtue of an organized framework that a market economy offers. Demand forces or rather market demand being faced by a commodity is the amount of that particular good that people want to consume.

There are a number of factors though, which operate behind the demand posed by the consumers. However, according to the law of demand, commodity demand depends upon the price of a commodity with the two variables related inversely with one another, i.e., if there is a rise in commodity price, market demand for the good falls and vice-versa. In fact, it is quite in line with logic since people generally prefer to buy low-priced goods when substitute goods are available in the market. But even if substitute goods are not available, there are chances that the demand for a high-priced commodity falls when its price rises.

But, the law of demand does not consider other factors which induce a substantial impact on the amount consumed; rather, it only includes its retail price while holding the other elements as constant.