1- Definition of supply & demand
2- Price from buyer's point of view.
3- Price from seller's point of view.
4- what's the meaning of demand curve & supply curve?
1- Definition of supply & demand
- Business has competitive strategies which influence by supply & demand
Supply refers to "quantities of a good or service that producers will provide on a particular date at various prices". Demand refers to "the amount of a good or services that consumers will buy at that time at various prices".
- But in real life, pricing depend on the type of product being sold. You aren't going to stop taking your medicine just because the price goes up.
- a drop in price may lead to more of production, not less. Assume that you need sales of $10,000 a day & you have been selling an average of 2,000 products a day priced at $5. If the price drops to $4, you will try to increase sales to 2,500 products a day to maintain the $10,000 level.
2- Price from buyer's point of view.
- if you want to buy blue jeans, and it cost you $35 but you don't have enough money so you will wait until the price go down at the sale to $18 so you can buy it now. But when the store takes the blue jeans from manufacturers at $20 & sells it at $35 they achieve profit but it will lose if it sells the blue jeans at $18.50. Is there a price that will make both supplier & the customer happy? Te answer is yes the price at which the number of jeans demanded equals the number supplied.
3- Price from seller's point of view.
- The supplier may offer 30 pairs of blue jeans at $35 you and your fellow consumer want to buy 10 pairs at that price if the supplier offered 30 pairs, so it would probably be stuck with some that it would have to make down. How does the store avoid this problem? It look at the point where the demand curve & the supply curve intersect, the point of intersection called equilibrium price " point at which quantity supplied equal quantity demanded & are in balance". In purely free-market system economy, no outside interference disrupts that interaction.
4- what's the meaning of demand curve & supply curve?
- Demand curve means "series of points on graph showing the relationship between price & quantity demanded"
- Supply curve means "series of points on a graph showing the relationship between price & quantity supplied.
to be continued
0 Response to "Supply & Demand"
Post a Comment