In this essay we will discuss about Supply of a Commodity. After reading this essay you will learn about:
Demand curve The quantity of a commodity demanded depends on the price of that commodity and potentially on many other factors, such as the prices of other commodities, the incomes and preferences of consumers, and seasonal effects.
In basic economic analysis, all factors except the price of the commodity are often held constant; the analysis then involves examining the relationship between various price levels and the maximum quantity that would potentially be purchased by consumers at each of those prices.
The price-quantity combinations may be plotted on a curve, known as a demand curvewith price represented on the vertical axis and quantity represented on the horizontal axis. A demand curve is almost always downward-sloping, reflecting the willingness of consumers to purchase more of the commodity at lower price levels.
Any change in non-price factors would cause a shift in the demand curve, whereas changes in the price of the commodity can be traced along a fixed demand curve. Supply curve The quantity of a commodity that is supplied in the market depends not only on the price obtainable for the commodity but also on potentially many other factors, such as the prices of substitute products, the production technology, and the availability and cost of labour and other factors of production.
In basic economic analysis, analyzing supply involves looking at the relationship between various prices and the quantity potentially offered by producers at each price, again holding constant all other factors that could influence the price.
Those price-quantity combinations may be plotted on a curve, known as a supply curvewith price represented on the vertical axis and quantity represented on the horizontal axis. A supply curve is usually upward-sloping, reflecting the willingness of producers to sell more of the commodity they produce in a market with higher prices.
Any change in non-price factors would cause a shift in the supply curve, whereas changes in the price of the commodity can be traced along a fixed supply curve.
Market equilibrium It is the function of a market to equate demand and supply through the price mechanism. If buyers wish to purchase more of a good than is available at the prevailing price, they will tend to bid the price up. If they wish to purchase less than is available at the prevailing price, suppliers will bid prices down.
Thus, there is a tendency to move toward the equilibrium price. That tendency is known as the market mechanism, and the resulting balance between supply and demand is called a market equilibrium. As the price rises, the quantity offered usually increases, and the willingness of consumers to buy a good normally declines, but those changes are not necessarily proportional.
The measure of the responsiveness of supply and demand to changes in price is called the price elasticity of supply or demand, calculated as the ratio of the percentage change in quantity supplied or demanded to the percentage change in price.
Thus, if the price of a commodity decreases by 10 percent and sales of the commodity consequently increase by 20 percent, then the price elasticity of demand for that commodity is said to be 2. The demand for products that have readily available substitutes is likely to be elastic, which means that it will be more responsive to changes in the price of the product.
That is because consumers can easily replace the good with another if its price rises. Firms faced with relatively inelastic demands for their products may increase their total revenue by raising prices; those facing elastic demands cannot. Supply-and-demand analysis may be applied to markets for final goods and services or to markets for labour, capitaland other factors of production.
It can be applied at the level of the firm or the industry or at the aggregate level for the entire economy. Learn More in these related Britannica articles:Supply is considered to be the amount of a good that is available to purchase, while demand is the need which can be obtained by paying.
If you are eager to be cognizant about this notion, refer to good essay topics. The effects of supply and demand are clearly demonstrated in the automotive parts supply industry.
Due to the increased consumption of new and scrap steel in China, a relatively new world manufacturing market, the supply of /5(17).
Buy Cheap Supply and Demand Essay The ideas of supply and demand are very essential to finances, as they are the backbone of market economy. Demand is the competence or the enthusiasm of a consumer to buy manufactured goods at a particular price and given time.
The supply and demand of commodities affect the prices of products. Regan presents an argument on the changes of the milk prices in the recent market study (Regan, ).
According to the article, the demand for milk remains high even after the prices went up by a huge percentage.
Sample Essay. Words This essay discusses economical issues related to supply and demand. The quantity demanded and the amount supplied determines the market equilibrium price which is achieved when quantity supplied is . Supply and Demand Factors Understanding supply and demand is the underlying foundation of all economics.
The term demand is used to indicate consumers’ willingness to buy while supply indicates willingness to sell.