SupplyandDemand.html.zip

Supply and Demand.html

Supply and Demand

There are several basic relationships in economic theory, such as supply and demand or costs and revenues. A market is a place where potential buyers and sellers come together. All of them have their own perspectives on the market and differ in how much they are willing and able to buy or sell. The mathematical relationships that express these behaviors are called supply and demand functions.

The demand side of the market shows how buyers behave. For most goods and services, as the price decreases, the demand for the goods increases. This behavior is described by the Law of demand. This function shows that as price changes, the quantity demand moves in the opposite direction.

The supply side depicts how the sellers or suppliers of a good perceive the market. They see the same prices as the buyers but react to these in the opposite manner. As the prices increase the quantities supplied by sellers increase and vice versa. As these factors change, managers must be able to incorporate these changes into the supply function and the decision making process.

The market for goods and services are rarely in a state of balance and constantly changes. Both buyers and suppliers in the market aspire to an ideal situation called market equilibrium, the point at which supply and demand functions are equal. It is the point at which buyers and sellers agree as to the amount that will be sold as well as the price that will be paid.

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SupplyandDemand.html.zip

Supply and Demand.html