Where supply and demand meet
Supply And Demand Quotes (17 quotes)
2. Algebra of Supply and Demand
Supply and demand
The laws of supply and demand determine what products you can buy, and at what price. Imagine the scenario: you arrive at the market to stock up on fruit, but it's been a bad year for apples, and supplies are low. The price has gone up, even since last week — but you accept the increase and snap them up anyway. On the plus side, there's been a bumper crop of pears. The growers are keen to sell as many as they can before their produce starts to rot, and they've slashed their prices accordingly. But you're in no hurry — you know that if you come back at the end of the day they'll be even cheaper.
Supply and demand , in economics , relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. It is the main model of price determination used in economic theory. The price of a commodity is determined by the interaction of supply and demand in a market. The resulting price is referred to as the equilibrium price and represents an agreement between producers and consumers of the good. In equilibrium the quantity of a good supplied by producers equals the quantity demanded by consumers.
We now examine how an industry supply curve and market demand curve interact to produce a market equilibrium. We have already discussed the factors that affect the shape and position of each of these curves: price, income, and consumer preferences in the case of the demand curve; price, costs, and other factors in the case of the supply curve. What the supply and the demand curves have in common is their representation of responses to price. Two key mechanisms are involved in ensuring that if price is not at this clearing level, it will adjust until it reaches that level. These are as follows.
Having an idea of demand and supply individually only gives us a small portion of the larger economic picture. Much like knowing two people as individuals, only when you get them together and see how they interact, we see a greater story. So far the story involves Demand and Supply respectively. Now we learn how they interact. Demand and supply represent separate phenomenon expressed through quantity and price.