Influence in Demand & Supply - Research Paper Example

Teacher Product: Wonder bread The law of supply governs the dynamics of all products inescapably that includes its price, supply anddemand. To illustrate how supply and demand influences the products in the market, we can use the example of the universal staple food which is bread. But before explicating further how the law supply and demand influences bread in the market, we need to understand first the nature of bread – that it is food, a necessity that we have to eat everyday otherwise we will starve and die.

The law of supply and demand influences the price of bread and its availability in the market (www.sophia.org). To be specific, we can take Wonder Bread brand as an example (www.wonderbread.com). Price is a primary consideration when it comes to food. People and their respective governments are always on the watch on the movement of the price of food because if it becomes very expensive, it may not become affordable to many people and that would be socially dangerous. Hungry people do a lot of unimaginable things.

It is not also good for the price to go become very cheap because that would harm the agricultural sector where farmers are deprived of the incentive of profit to produce. But this price that influences the price of bread is influenced by several factors and it is primarily determined by the supply side. The demand side is constant because people have to eat regardless of price or else they will starve and die. In economics, this is called inelastic demand where demand is not influenced by the price (www.about.com).

So it follows that even if bread becomes dirt cheap, people will still buy the same amount of bread because they can only eat so much bread. But if its availability becomes scarce, its price will shoot up because the same demand will be running after a limited supply. Scarcity of bread can be brought by a lot of factors such as drought that affected its raw material which is wheat, trade embargo in case where an embargo is imposed or high tariff cost which made its importation expensive in the case that a country has to import its raw materials or its price could be influenced by its complement products such as sandwich spread (www.auburn.edu).

Supposed the price of bread shot up that many people can no longer afford it. This could bring about the necessity for people to look for food alternatives or substitutes because they still need to eat. First they may look for other brands, but if other brands have similar price, they would extend their alternatives to any doable alternative they can afford such as rice. But since bread is a staple food, it is better that its price will remain the same so as not to cause social disruption such as food riots (Eidelson).

A sudden increase in the price of basic commodities such as bread can be a cause of social unrest and this explains why governments are watchful of the price of basic commodities. Under normal condition, people can consume only a regular amount of bread and this consumption will gradually increase as population increases or if there is an occasion or an event where people are in festive eating mode such as Christmas, New Year or Thanksgiving Day. This is a good phenomenon because the dynamics of supply and demand is behaving in a regular manner where the rise in demand is predictable so that the supply can also adequately respond to meet the demand thus not causing so much distortion in the price.

Works Cited "A Glossary of Political Economy Terms." Complementary goods:. N.p., n.d. Web. 10 Feb. 2014. . Eidelson, Josh. "Salon." Saloncom RSS. N.p., n.d. Web. 10 Feb. 2014. . "Inelastic Demand." About.com US Economy. N.p., n.d. Web. 10 Feb. 2014. . "Economic Basics: Supply And Demand." Sophia. N.p., n.d. Web. 10 Feb. 2014. . "Wonder is Back.." Wonder Bread. N.p., n.d. Web. 10 Feb. 2014.