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Supply And Demand Essay

965 words - 4 pages

Supply and Demand
Supply and demand is perhaps one of the most fundamental concepts of economics and is the backbone of a market economy and the qualities they share. In this paper, I will discuss what causes changes in supply and demand, determine how changes in price and quantity will influence market equilibrium. I’ll also describe how the necessity of a good and the availability of substitutions affect prices and compare and contrast market systems and the role of an economist within those systems.
Supply, a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers. Supply also refers to the quantity of goods a vendor or ...view middle of the document...

This law and its changes help in reaching equilibrium. Equilibrium is the intersection of supply and demand curves. The equilibrium price is the price where the quantity demanded matches the quantity supplied. Consumers are satisfied and are willing to purchase that product with no hesitation. The changes in equilibrium depend on price of a particular product, for example, when company has a shortage of a product the price will raise. The company will try to get the most for their product and in turn if there is a large quantity of product the price has to fall in order for the company to sell as much as possible to make a good profit. Consumers will only purchase a product that is expensive if it is extremely necessary but they will not purchase in a large quantity. When there is a shift in price, the market has to reach its equilibrium once again, as if shifts overtime that there is a change in price.
The quantity of a product has to do with the demand. If a company is aware that a product is not going to sell the majority or the entire product, the quantity produced will be at company standards. Business and consumers will respond by adjusting their price levels and this will eventually restore the quantity of the price to the equilibrium. The quantity produced will always depend on the price, companies are not going to loose money, and they are in it to win it.
When we compare and contrast economic market systems, we must first start by defining all three types. The most common and most utilized market system in North America is the Perfect Competition system. In this system, there are many buyers and sellers of a similar particular product which all look the same, and with the investment cost being low. In the...

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