The Core Concepts Of Economics

1241 Words Apr 29th, 2016 5 Pages
Introduction
The two factors Demand and Supply are the core concepts of economics. Demand states the quantity of a product one requires to fulfill his needs at particular price stand. On the other hand supply refers market offering of a product at specific price level. There are numerous constituents that affect the Demand of a product. For example Price, availability of alternative products in market, price of the alternative products, buyers’ income, buyers’ purchasing power parity, number of buyers available in the market, changes in buyers’ taste and preferences etc., on the other hand supply of a given product is also affected by various factors for example. Price of the product, prices of factor of production, changes government policies, introduction of new technologies, firms’ goals and objectives etc. We need to understand technical aspects of demand and supply before explaining about factors other than the price that affect demand and supply in a particular country.
Demand and Supply Mechanics
Marshal concludes that there is a negative relationship between price and demand as when the prices of any particular product rises, demand get decreased and when prices fall of a product demand of that product will increase, keeping all other factors constant that has an impact on demand of a product. However, there is a positive relationship between price and supply of any product keeping all factors constant that have an impact on quantity supply. When price of the…

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