Supply and Demand
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- Category: Science
- Date Submitted: 11/28/2010 07:27 PM
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Supply and Demand & Price Elasticity
The economy is shaped by events and policies that consist of the tools of supply and demand in various markets. Supply and demand is described by how prices vary due to the balance between the availability of a product or service at each price and the desirability of the product or service at each price. Supply and demand is what governs the way that economics functions. The activities of buyers and sellers determine how the changes in price and quantity influence market equilibrium. These prices can be determined by factors such as availability of goods, price, substitutes, income, expectations, and taste and preferences (Tomlinson, n.d.). Other considerations in market-based economic systems are competitiveness, monopolies and oligopolies.
Supply and demand are the forces in which market economies work. They determine the quantity of each good produced and the price sold. (Mankiw, 2006, p.63) Just like everything in life, supply and demand often change. The change in supply and demand can occur for many different reasons.
Changes in demand occur whenever one or more of the determinants of demand change and the demand curve shifts. Changes in consumer preferences will change demand. Consumer preferences can change through advertisement. Every time an individual turns on the television some sort of advertisement for the latest cell phone or the newest fashion trend. Advertisement can be considered a major determinant of the change in demand.
A good way to increase demand is to tie a product in with another, more popular product. For instance, when DreamWorks Animation comes out with a new movie, it usually can make a profit from stuffed animals, video games, and action figures from that same movie.
Another cause of an increase in demand is consumer income. A drop in consumer income will normally be associated with a decline in demand. A change in supply occurs whenever one or more of the...
The economy is shaped by events and policies that consist of the tools of supply and demand in various markets. Supply and demand is described by how prices vary due to the balance between the availability of a product or service at each price and the desirability of the product or service at each price. Supply and demand is what governs the way that economics functions. The activities of buyers and sellers determine how the changes in price and quantity influence market equilibrium. These prices can be determined by factors such as availability of goods, price, substitutes, income, expectations, and taste and preferences (Tomlinson, n.d.). Other considerations in market-based economic systems are competitiveness, monopolies and oligopolies.
Supply and demand are the forces in which market economies work. They determine the quantity of each good produced and the price sold. (Mankiw, 2006, p.63) Just like everything in life, supply and demand often change. The change in supply and demand can occur for many different reasons.
Changes in demand occur whenever one or more of the determinants of demand change and the demand curve shifts. Changes in consumer preferences will change demand. Consumer preferences can change through advertisement. Every time an individual turns on the television some sort of advertisement for the latest cell phone or the newest fashion trend. Advertisement can be considered a major determinant of the change in demand.
A good way to increase demand is to tie a product in with another, more popular product. For instance, when DreamWorks Animation comes out with a new movie, it usually can make a profit from stuffed animals, video games, and action figures from that same movie.
Another cause of an increase in demand is consumer income. A drop in consumer income will normally be associated with a decline in demand. A change in supply occurs whenever one or more of the...