Question

Discussion 1
- Use your own words and be sure to support your statements with logic and arguments. Post your comments
Q1- Recognize how changes in supply and demand affect market outcomes and explain the effect of government regulation on prices?

Q2- Students are required to reply to at least two peer responses to this week’s discussion question.

((((These answers students, I want you to answer the first and second answers)))

1-Demand is an inverse relationship between the quantity of output and the price. If the price of the product falls, the demand for it increases, and vice versa. For example, I have a mocha cup and a latte coffee cup, the price of latte coffee is lower than the price of a mocha cup. In this case, the demand for a cup of latte coffee increases, and the demand for a mocha cup decrease.

Supply is a centrifugal relationship between quantity supplied and price. Suppliers offer less quantity when the price falls and more quantity when the price rises.

For example, a factory producing pasta whose market price is 6 riyals, if it falls to 3 riyals, the quantity supplied decreases because it does not make a profit, but if the price increases to 8riyals, then the quantity supplied to increase. So supply and demand change with the change in the market price of a commodity.

Determining the price is in the interest of merchants, factory owners, companies, and consumers, and it is a price that everyone can bear and the economy does not lose to the state, and it prevents merchants from raising the price from the top Limit.

2- The price of the product changes if consumer demand increases for it and thus leads to an increase in its supply. And when the supply becomes equal to the demand, the equilibrium price and the quantity of supply decrease.

The most prominent things that governments have done in regulating market prices is to impose taxes on products in which the supply increases. After the tax, the price becomes high, At this, the desire of the consumers to demand will decrease.

I want an article answer

Answer 1

Equilibrium is a situation in which the price has reached the level where quantity supplied equals quantity demanded. The price at this intersection is called the equilibrium price; the quantity is called the equilibrium quantity. The actions of buyers and sellers naturally move markets towards the equilibrium of supply and demand.

If there is a surplus of the good, suppliers are unable to sell all they want at the going price. A surplus is sometimes called a situation of excess supply. The sellers respond to the surplus by cutting their prices. Falling prices increase the quantity demanded and decrease the quantity supplied. Prices continue to fall until the market reaches the equilibrium. If there is a shortage of the good, demanders are unable to buy all they want at the going price. A shortage is sometimes called a situation of excess demand. Sellers can respond by raising their prices without losing sales. As the price rises, quantity demanded falls, quantity supplied rises and the market moves toward the equilibrium. The law of supply and demand says: the price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance.
A legal maximum on the price at which a good can be sold is called a price ceiling. A legal minimum on the price at which a good can be sold is called a price floor.

A legal maximum on the price at which a good can be sold is called a price ceiling. A legal minimum on the price at which a good can be sold is called a price floor.

How price ceilings affect market outcomes
When the government, moved by the complaints and campaign contributions imposes a price ceiling on the market, two outcomes are possible. If the equilibrium price is lower than the ceiling, the price ceiling is not binding. Market can naturally

move the economy to the equilibrium and the price ceiling has no effect on the price or the quantity sold. If the government imposes a price ceiling lower than the equilibrium, the ceiling is a binding constraint on the market. The forces of supply and demand tend to move the price towards the equilibrium price, but when the market price hits the ceiling, it can rise no further. Thus, the market price equals the price ceiling. At this price, the quantity demanded exceeds the quantity supplied. A shortage develops and the buyers do get to pay a lower price, but some buyers can’t buy the good at all. That means. When government imposes a binding price ceiling on a competitive market, a shortage of the good arises and sellers must ration the scarce goods among the large number of potential buyer. The rationing mechanisms that develop under a price ceiling are rarely desirable.