What is supply and demand?
supply and demand is considered to be a basic economic concept and also an essential part of the free market economy. The offer is a quantity of something, such as the product or service available to the market. Demand is the amount of the product or service that the buyer wants to buy. The relationship between supply and demand has a great impact on the price of goods and services.
Understanding the law of demand is an important part of the decryption of the relationship between supply and demand. Under the demand Act, the price has a significant impact on demand. In principle, higher prices are reflected in less demand for product or service. If the price of an item or service is high, the individual must consider that the purchase of an item can prevent him from affording to purchase other, more valuable items. The cost of the opportunity for this item is therefore too high and the demand for it can be low.
The offer of the offer is also essential for understanding the relation of the ship between supply and demand. AccordingPromised at a higher price. Those who produce goods and offer services are willing to provide more at higher prices because the sale of their goods at higher prices provides increased income.
If you want to understand this economic relationship, consider a unique gift item that is the price of $ 99 (USD). The company that creates a gift item has analyzes in the previous sale and determines that the demand for this particular item will be low if the price is higher than $ 99. The company decides to produce and release only 100 gift items, as its analysis predicts that the cost of the opportunity is too high to ensure high demand. However, if 200 people require a gift item, the price will increase with the demand. Because higher prices lead to an increased offer, it will produce multiple gift items and offered.
Relationship of supply and demand affects the price of other ofacting when the company created too many items. For example, if a gift company increases production and creates 500 gift items, but the demand remains at 200, the supply exceeds the demand and the price does not increase. In fact, the company can actually reduce the price in an effort to attract consumers who considered the gift item to be attracted, but thought the cost of the opportunity was too high.
It is possible that supply and demand are the same. To do this, the amount of products or services supplied must be equal to demand for these products and services. If this is achieved, the economy is balanced in a state of balance.