Реферат: Supply And Demand Essay Research Paper Market

Supply And Demand Essay, Research Paper

Market demand is best defined as each consumer s demand for a particular product, or each firm s demand for a particular factor. The law of demand specifies that the amount demanded varies inversely with price . The following diagram can best demonstrate this. The table shows the maximum rate of purchase. That is, where the price is $40, consumers will buy 200 units and no more.

Price $ Quantity Demanded

20 240

40 200

60 160

80 120

100 80

120 40

The demand curve can be used to give a graphical representation of the above data.

Movement along the demand curve is caused only by a change in price. An Increase in price results in a move upward in the demand curve. This is known a contraction in demand (or a decrease in the quantity demanded). Conversely, if the price falls, then there is an expansion in demand (or an increase in the quantity demanded).

Some conditions result in a shift of the curve itself (or in this case line). It is important to understand that unlike a movement along the demand curve, this change as nothing to do with price, and in fact has a number of contributing factors. A shift to the right of the original curve represents an increase in demand, and a shift to the left, represents a decrease in demand. An increase in demand means that consumers are more willing and able to purchase a given quantity of the product in question at the same price.

Possible reasons for increase in demand

+ Increased income levels

+ Higher price of substitutes (e.g. Chocolate and Carob)

+ Expected future price rises (consumer expectation causes increase)

+ Changes in fashion, preference and taste

+ Increase in population

A decrease in demand means that consumers are less willing and less able to purchase a given quantity of the good at the original price. It also means that consumers are able to buy a given quantity at a lower price than before.

Possible reasons for a decrease in demand

+ Decreased income levels

+ Lower price of substitutes

+ Expected future price falls (consumer expectation causes decrease)

+ Changes in fashion, preference and taste

+ Decrease in population

Market Supply is defined as the quantity of goods and services that an industry is willing and able to offer the market at different price levels at a given point in time. The laws of supply state that producers will supply more of a product at a higher price and less at a lower price .

Price $ Quantity Supplied

120 240

100 200

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