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The Theory Of Supply And Demand

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When an individual wants a good or service they will go wherever they need to get that good or service that they want. You never really think how it gets there or why there isn’t any left. When you go to the store to buy groceries and the price has went up you tend to get upset. Although, when they go down you think to yourself that you better stock up. All of these changes occur because of demand and supply. Demand and supply are the key components for the economy. Kirzner (2000) states in his article: The theory of supply and demand is recognized almost universally as the first step toward understanding how market prices are determined and the way in which these prices help shape production and consumption decisions-the decisions that make up not shapes the prices for production and consumption of goods and services.
Demand
According to Moffatt “Demand is the relationship between the quantity of a good or service consumers will purchase and the price charged for that good”. It is the want or need for a good or service to be produced. The amount of a good at a certain price that an individual is willing to buy is called quantity demand. Prices fluctuate for many reasons. When a price of a good or service goes up or down it is called law of demand. If the price rises, the quantity demanded goes down. If the price goes down, the quantity demanded goes up. This being that everything else is equal. Also known as ceterius paribus. The two have an inverse effect on
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