Economic Theories : Supply And Demand

1510 WordsDec 9, 20147 Pages
Jasmine Lyons Professor Earwicker Professor Sweet Cornerstone 8 December, 2014 Economic Theories: Supply and Demand The world runs on the concept of supply and demand. Supply and demand are the key concepts in the economist theory. Supply is simply how much of a product that the market can make and offer to consumers for a certain price. The supply can depend on resources of the producer or how willing they are to produce it. While, demand is how much the consumers insist on paying for a product or service (cite website1). As I stated before, the world runs on this economic theory. Economics is not a concept limited to more advance societies such as the United States. In all countries economist are investigating the relationships between price and quantity in-regards-to both supply and demand, the demand curve, market demand and there variables, the supply curve, and shifts that occur. The relationship between price and quantity is a bit simpler then one would first imagine. As the price of product or service rises there is a clear decrease in quantity. Since the price is raised, the producers try to make a sacristy; therefore, the consumer will feel more willing to buy that service or product if it is within their means. Opposite to that, when a price of a good lowers consumers are more likely to substitute it with different goods (McEachern). This is all influenced by relative price. Relative price is the price of a certain product or service compared to the prices of

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