Question

explain demand and supply how comfortable talking about then find an example within your community?

Answer 1

In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.

Supply and demand is one of the most basic and fundamental concepts of economics and of a market economy. The relationship between supply and demand results in many decisions such as the price of an item and how many will be produced in order to allocate resources in the most cost-effective and efficient way.

Examples of the Supply and Demand Concept

Supply refers to the amount of goods that are available. Demand refers to how many people want those goods.

• When supply of a product goes up, the price of a product goes down and demand for the product can rise because it costs loss.
• At some point, too much of a demand for the product will cause the supply to diminish. As a result, prices will rise. The product will then become too expensive, demand will go down at that price and the price will fall.
• Supply and demand should reach an equilibrium. The amount of goods being supplied is the same as the amount demanded and resources are allocated efficiently.

Examples of the Law of Supply

• Corn crops are very plentiful over the course of the year and there is more corn than people would normally buy. To get rid of the excess supply, farmers need to lower the price of corn and thus the price is driven down for everyone.
• There is a drought and very few strawberries are available. More people want the strawberries than there are berries available. The price of strawberries increases dramatically.
• A huge wave of new, unskilled workers come to a city and all of the workers are willing to take jobs at low wages. Because there are more workers than there are available jobs, the excess supply of workers drives wages downward.