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    Supply and Demand Examples

    Uploaded by

    Jay R Chiva
    This document provides examples of how the laws of supply and demand work. It explains that supply refers to the amount of goods available, while demand refers to how many people want those goods. When supply increases, prices typically decrease and demand may rise. When demand increases for a limited supply, prices usually increase. The relationship between supply and demand aims to reach an equilibrium where the amount supplied equals the amount demanded. Examples are given to illustrate how supply and demand impact prices for goods like corn, strawberries, and labor. Demand is also shown to increase for goods no longer being produced, like art by a deceased artist, or goods that lose popularity. How businesses use supply and demand principles to set profitable prices is additionally demonstrated.

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    © All Rights Reserved
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    Supply and Demand Examples

    Uploaded by

    Jay R Chiva
    72 views2 pages
    This document provides examples of how the laws of supply and demand work. It explains that supply refers to the amount of goods available, while demand refers to how many people want those goods. When supply increases, prices typically decrease and demand may rise. When demand increases for a limited supply, prices usually increase. The relationship between supply and demand aims to reach an equilibrium where the amount supplied equals the amount demanded. Examples are given to illustrate how supply and demand impact prices for goods like corn, strawberries, and labor. Demand is also shown to increase for goods no longer being produced, like art by a deceased artist, or goods that lose popularity. How businesses use supply and demand principles to set profitable prices is additionally demonstrated.

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    Supply and Demand Examples

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    This document provides examples of how the laws of supply and demand work. It explains that supply refers to the amount of goods available, while demand refers to how many people want those goods. When supply increases, prices typically decrease and demand may rise. When demand increases for a limited supply, prices usually increase. The relationship between supply and demand aims to reach an equilibrium where the amount supplied equals the amount demanded. Examples are given to illustrate how supply and demand impact prices for goods like corn, strawberries, and labor. Demand is also shown to increase for goods no longer being produced, like art by a deceased artist, or goods that lose popularity. How businesses use supply and demand principles to set profitable prices is additionally demonstrated.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    72 views2 pages

    Supply and Demand Examples

    Uploaded by

    Jay R Chiva
    This document provides examples of how the laws of supply and demand work. It explains that supply refers to the amount of goods available, while demand refers to how many people want those goods. When supply increases, prices typically decrease and demand may rise. When demand increases for a limited supply, prices usually increase. The relationship between supply and demand aims to reach an equilibrium where the amount supplied equals the amount demanded. Examples are given to illustrate how supply and demand impact prices for goods like corn, strawberries, and labor. Demand is also shown to increase for goods no longer being produced, like art by a deceased artist, or goods that lose popularity. How businesses use supply and demand principles to set profitable prices is additionally demonstrated.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Supply and Demand Examples

    Supply and demand is one of the most basic and fundamental concepts of economics and of a market
    economy. The relationship between supply and demand results in many decisions such as the price of
    an item and how many will be produced in order to allocate resources in the most cost-effective and
    efficient way.

    Examples of the Supply and Demand Concept


    Supply refers to the amount of goods that are available. Demand refers to how many people want
    those goods.
     When supply of a product goes up, the price of a product goes down and demand for the product
    can rise because it costs loss.
     At some point, too much of a demand for the product will cause the supply to diminish. As a
    result, prices will rise. The product will then become too expensive, demand will go down at that
    price and the price will fall.
     Supply and demand should reach an equilibrium. The amount of goods being supplied is the
    same as the amount demanded and resources are allocated efficiently.

    Examples of the Law of Supply


     Corn crops are very plentiful over the course of the year and there is more corn than people
    would normally buy. To get rid of the excess supply, farmers need to lower the price of corn and
    thus the price is driven down for everyone.
     There is a drought and very few strawberries are available. More people want the strawberries
    than there are berries available. The price of strawberries increases dramatically.
     A huge wave of new, unskilled workers come to a city and all of the workers are willing to take
    jobs at low wages. Because there are more workers than there are available jobs, the excess
    supply of workers drives wages downward.

    Examples of the Law of Demand


     A popular artist dies and, thus, he obviously will be producing no more art. Demand for his art
    increases substantially as people want to purchase the few pieces that exist.
     A cultural fad item that was all-the-rage for a period of time falls out of favor and is no longer
    "cool." Demand for the item falls dramatically as it is no longer the must-have item of the
    season.
     A new restaurant opens up in town and gets great reviews. There are only 12 tables in the
    restaurant but everyone wants to get a reservation. Demand for the reservations goes up.

    How the Law of Supply and Demand Works


     A company sets the price of its product at $10.00. No one wants the product, so the price is
    lowered to $9.00. Demand for the product increases at the new lower price point and the
    company begins to make money and a profit.
     The company could lower the price to $5.00 to increase demand even more, but the increase in
    the number of people buying the product would not make up money lost when the price point
    was lowered from $9.00 to $5.00. The company leaves the price set at $9.00 because that is the
    point at which supply and demand are in equilibrium. Raising the price would reduce demand
    and make the company less profitable, while lowering the price would not increase demand by
    enough to make up the money lost.
    These are examples of how the law of supply and demand works in the real world.

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