The Economics of Supply and Demand

Paper Summary:

This paper explains the economics of supply and demand, as well as examines those factors that can cause a shift in supply and demand. Supply is the amount of goods producers are willing and able to sell at a given price. Demand is the amount of a good that consumers are willing and able to buy at a given price. Factors influencing supply and demand include the price of the good and the income of the consumer.

From the Paper:

"Supply and demand are at the heart of how free market economies work. Under normal conditions, the price of any product is determined by two factors, the demands for the product and the available supply. The selling price serves as a mechanism to inform consumers and the producers of the relative scarcity of the product. This will encourage the merchant to adjust how much they sell it for and the level of demand by the consumers. When the market for an item is cleared of excess supply or demand equilibrium is achieved. Therefore when demand exceeds supply the prices will rise. This will cause increased profits and will motivate sellers to increase their supply. Buyers will continue to drawn into the market until demand is fully satisfied. "

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