Economic Theories : Supply And Demand

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Economic Theories: Supply and Demand
The economic theory of supply and demand explains the interaction between the supply of a resource and the demand for that same resource. If the product has high demand, it is typically more expensive. In sum, if there is a low supply and high demand then the price will be high. If there is an abundant supply and a low demand, the price will be low. This principle is the basis of all economic understanding. It is a global phenomenon that can be seen across the planet. From the lemonade stand you set up as a kid, to the corporations that own the oil and gas industry, every business is affected by supply and demand. It can be found in a wide range from pure command to pure capitalism (McEachern).
In any given market, the relationship between supply and demand will reach a natural equilibrium. The supply is determined by the producer of the goods or service. The consumer sets the demand. Consumers are less willing to purchase a good or service at a high price and more likely at a low price. Similarly, producers are less motivated to sell a good or service at a low price and more willing to sell it at a high price. These two opposing positions naturally balance out at the point which the producers are willing to sell their product, and the consumers are willing to purchase it. Once reaching this point, the relationship between supply and demand has achieved a natural equilibrium (McEachern).
A clear example of supply and demand was seen
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