Demand and Supply.
Demand and supply are practical economic concepts in the real world. The economic terms are applicable in life. For example, tickets to a popular football match shows how when there are few seats the ticket prices go up based on demand.
A less preferred match in the same venue will have lower ticket price due to minimal demand. Supply and demand are economic models of the market price determination. There are various laws governing both supply and demand separately (Prasch, 2008).
This paper seeks to discuss the concept of demand and supply and equilibrium price and quantity.Demand is the quantity of product consumers are willing to purchase at a price at a time. However, quantity demanded may vary depending on the limited resources.
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In conclusion, the product price in a competitive market varies until it settles at market equilibrium: where quantity demanded at a price equals to the quantity supplied at the same price: this is equilibrium price and quantity.
There are laws that govern this economic model. When supply remains unchanged, and demand increases, there will be a shortage and hence higher equilibrium price. When demand remains unchanged, and supply increases, there will be a surplus and hence a lower equilibrium price.
If supply remains unchanged, and demand decreases, there will be a surplus hence lower equilibrium price. When demand remains unchanged, and supply decreases, there will be a shortage and hence a higher equilibrium price (Prasch, 2008).
Prasch, R. E. (2008). How markets work: Supply, demand and the ‘real world’. Cheltenham, UK: Edward Elgar
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