This paper illustrates the holds and interactions of the laws of demand and supply in the free market economy through the example of the personal computer market. The purpose of this study is to find the reasons which led to the fall in prices of computer while demand for this products increased…
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This rising demand has led to the fall in prices of the computers. The objective of this study is to analyze the factors that have led to the fall in prices of computers. This would help in understanding the theories of economics related to market demand-supply and undertake an analysis to find the application of the underlying theories of economics in practical conditions of the market. The study would help to provide an insight of the impacts of changing market condition on the prices of the products. The effects of the increase in demand of the computers on its prices in the market could be explained by relating the actual market scenario with the concepts of economic theories. The study also helps us to understand the effects of changing behavior of the market with the help of supporting data and diagrams. Analysis In economics theory, the demand and supply of a product plays an important role in determining the price of the product. The fall in prices of the computer is also attributed to a change in the demand of the computers. The price of computers would vary until the market reaches a point of equilibrium where the demand of computers is equal to the supply of computers (Carbaugh, 2011, p.11). Since the prices underwent a change with respect to the change in demand and supply of computers, the product is said to be elastic. The increase in demand of the computers in the market can be attributed to factors like increase in the number of population, change in preference, taste and level of livelihood, and finally increase in income levels of the people. More people started to afford computers which led to increase in demand of the computers. A statistical analysis given below shows that the number of computers...
This paper offers a thorough analysis of the recent tendencies on the personal computer market, which are determined by interactions of the underlying economic laws. The objective of this study is to analyze the factors that have led to the fall in prices of computers. The distribution and cost of goods in a free market are based solely upon the demand and supply of the products.
The distribution and cost of goods in a free market are based solely upon the demand and supply of the products. The analysis conducted helps in understanding the theories of economics related to market demand-supply. The application of the underlying theories of economics in practical conditions of the market is considered. The study provides an insight of the impacts of changing market condition on the prices of the products. The effects of the increase in demand of the computers on its prices in the market could be explained by relating the actual market scenario with the concepts of economic theories.
The demand of computers increased over time due to several factors. The rise in demand of computers would cause rightward shift of the demand curve leading to rise in the quantity demanded and rise in prices of computer. In order to maintain the position of equilibrium, the supply levels to the market also increased. As a result of increased supply, the supply curve would shift rightward leading to rise in the level of quantity supplied and a reduction of level of prices of computer. The quantity available increased leads to fall in prices.
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“Interactions of The Laws of Demand and Supply in the Personal Computer Essay”, n.d. https://studentshare.org/management/1473566-interactions-of-the-laws-of-demand-and-supply-in-the-personal-computer-market.
The paper discussed three concepts that are very important for any college student since they will come across these in daily lives as well during the professional careers. This is due to the reason that, the concepts have got established into the markets in the US and is important factors on which, several individuals and business establishment depend on.
Dr. Mukund further elaborates that a change in the equilibrium of supply and demand of money often results to a drastic change in the balance between supply and demand of commodities. Within the same field of economics, the supplier and consumer are vital in the equilibrium of supply and demand of both money and commodities (Mahajan Mukund 23).
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.
The theory of supply and demand attempts to "describe, explain, and predict changes in the price and quantity of goods sold in competitive markets. The model is only a first approximation for describing an imperfectly competitive market." (Supply and Demand, 2006).
In the computer market, there are many players and therefore, there are innumerable products. The computer market is characterized by the advancing technology and constant churning of products to meet customer needs. In this context, when a new variant is launched for an existing product, the value of the existing product falls considerably.
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In order to assess this situation, this paper will
Of course, taking this to its logical end would see producers continue to raise prices and more goods would be produced at the higher prices. However, the law is limited by other market forces such as a limited market, price ceilings, elasticity, shifts in the demand and supply curve, and equilibrium.
The universality of the laws of supply and demand is interpreted by natural occurrences within the market and shortcomings that result from interruptions would yield inconsistencies and ideally affect the natural flow of market entities. Repealing the laws