The Ins and Outs of Supply and Demand

Decent Essays

In this task I am going to explain demand and supply in details. Demand is how much people wants from a certain product. While supply is how much of something people have. Demand and supply involve in everything in our life, for example if human being feels that they need a certain product they will start to produce it to meet their demand. Demand and supply curves always have an inverse relation which means if the demand increase the supple will decrease and vice versa. Economists have created a theory of demand which states the following. Demand curve has a downward slopping which shows the relation between price and quantity while all other factors are equal. At higher prices the demand will decrease, while at lower prices demand will increase. There are some factors affecting the demand curve, these factors are:  Consumer income: if the consumer income changed their demand will change. For example, if a consumer had a pay rise he will be able to afford more of a certain product and if the consumer lost his job he will not be able to afford the same amount of the product.  Price of other goods: there are two types of other products. First a substitute product which consumer will prefer because it is cheaper. The other type is complementary products which are always bough together (e.g. fish and chips). Example of substitute product is if Nike increased prices, Adidas demand will increase.  Taste and preferences: preferences can cause a change in the

Get Access