Supply - Demand - Time - Price - Tax
Demand is the quantity of products or services a buyer is willing to buy at a certain price. On the other hand, supply is the amount of goods or services that a certain market is willing to supply at a certain price. The relationship between supply and demand is the one that determines resources allocation. Both supply and demand are represented by the relationship between quantity and price. These relationships are known as demand relationship, for quantity demanded and price relationship. On the other hand, the price and quantity supplied relationship is known as supply relationship (Arnold, 2014). This law states that the higher the price of goods the higher the price. Amount of goods that a buyer can buy at high prices is less as the opportunity cost is high. Less people will buy goods that are being sold at a high price as they will be forced to forego consumption of goods that have low prices. This law shows the relationship between quantity of goods sold and the price of those goods. According to this law, the higher the price of goods that are supplied the higher the supply.
Time is of essence when it comes to supply; the supplies must react to the demand or price but is always difficult. It is therefore important to determine the relationship between time and the supply this will in turn determine the quantity that is needed to be supplied to the consumers (Welfe, 2009). For example, if the demand and price for sweaters is high during the cold season the supply will be able to accommodate the demand through increase their production. On the other hand, if the weather patterns changes the demand and price will change as well. Producers will be expected to shift their production facilities to fit this demand.
[...] Hoover, W. E. (2001). Managing the demand-supply chain: Value innovations for customer satisfaction. New York: John Wiley. Klein, L. R. (2005). The economics of supply and demand. Baltimore, Md: Johns Hopkins University Press. Welfe, W. [...]
[...] (2009). Knowledge-based economies: Models and methods. Frankfurt am Main: Peter Lang. [...]
[...] If the demand is low, that is elastic demand, and there is an increase in tax the consumers bears the burden of tax and vice versa (Klein, 2005). Deadweight loss occurs when equilibrium is Pareto optimal resulting into loss of economic efficiency. This occurs when the people with less marginal benefit are buying more of a product while those with more marginal benefits are not. It can also be known as excess burden of taxation, and monopoly in pricing, taxing and subsiding. References Arnold, R. A. (2014). Micro economics. [...]
[...] Shift occurs when the demand or supply of goods changes but the price remains the same. For example, if the quantity of sugar demanded in a certain shop is 20 bags then the demand changes to 40 bags but the price of each bag remains the same. This shows that the demand is affected by another factor apart from the price. Similarly, shift in supply curves is caused by another factor other than the price where the price remains constant while the quantity changes. [...]
[...] Demand and Supply: Case study Demand is the quantity of products or services a buyer is willing to buy at a certain price. On the other hand, supply is the amount of goods or services that a certain market is willing to supply at a certain price. The relationship between supply and demand is the one that determines resources allocation. Both supply and demand are represented by the relationship between quantity and price. These relationships are known as demand relationship, for quantity demanded and price relationship. [...]
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