Demand and Supply - Essay Example

Only on StudentShare

Extract of sample
Demand and Supply

Stiglitz and Walsh (2002) demarcate these factors into economic and non-economic factors. Below is an elaboration of these 'other factors'.
An increase or decrease in the income of consumers may lead to a rise or fall in the demand for a product. This change by and large depends upon the nature of the commodity; i.e., inferior good or normal good. In case of an inferior good, an increase in the income of consumer will lead to a fall in the demand of that particular commodity and vice versa, because consumer will then shift to a product much better than the previous commodity in his/her perception. On the contrary, in case of a normal good, an increase in the income of the consumer will cause the demand for that commodity to rise shifting the demand curve to the right and vice versa.
This is another economic factor responsible for bringing about a shift in the demand curve. A change in demand of a particular product can be effectuated by a change in price of its close substitutes. The demand for a product will rise if the price of its substitute commodities increases, shifting the demand curve to the right and vice versa. For instance, the demand for coffee for some people will increase as the price of tea rises and vice versa. ...
Download paper


The law of demand simply states that any change (increase or decrease) in the price of a commodity will lead to a change (increase or decrease) in the quantity demanded of that commodity, while other factors remaining the same. Any change in quantity purchased by consumers due to a change in 'other factors' refers to a change in 'demand' causing a movement along the demand curve…
Author : cullen65

Related Essays

Supply, Demand and Easyjet
This project would talk about one component of marketing mix which is pricing strategies. The project is projected to address the pricing strategies that are followed by Easy Jet Airline and compare the price with the British Airways. Role of Pricing The fundamental rule of supply and demand states that when there is excess of supply over demand, the price tends to go down and when there is excess of demand over supply of products, the price tends to rise. Thus it can be suggested that prices moves upwards or falls in order to eliminate the risk of excess demand and to bring the supply and...
6 pages (1506 words) Essay
Marketing Economics: Aligning the Global Supply and Demand Chains
A research conducted by Ronaldo (2010) indicates that a significant loss of shareholder value emerges from gaps in demand and supply management. Mostly, these shortages in supply are caused by monopolized supply, poor forecasting, poor planning, low inventory levels, long delivery processes and poor communications. With a delay in one of the above elements of demand or supply, a big impact is evident in the business operations especially financially. When a company ignores the importance of advanced and innovative technology, it stands a big chance of losing its competitive edge. Demand can be...
5 pages (1255 words) Research Paper
Sucessful supply chain management and the creation of competitive advantages requires effective demand and supply chain manage
In this case, upstream interconnection focuses on source of supply, while downstream interconnection deals with distribution of commodities to customers. Therefore, SMG focuses creation and optimization of value in processes and activities for services and products that are offered in order to satisfy customer demands. SMG may also be considered a interrelationship and management of inflow and outflow of commodities and relevant information through a network that interlinks producers, manufactures and consumers (Samaranayake, 2005, 48). However, there is a need for a change in SMG, which is...
8 pages (2008 words) Essay
Affects of Supply and Demand on Business
d making the management to take the necessary course of action.Analysis of the market forces helps departmental decision making in that each and every section of the business optimizes resource allocation to minimize costs and maximize productivity in a bid to meet the demand in the market.Table of Contents Introduction Basic Laws and Principles of Demand and Supply Demand Side Supply Side Equilibrium Discussion Conclusion Works Cited Introduction Demand can be viewed as the quantity of goods and services that the market, consumers,is willing to purchase and consume within a given period of...
4 pages (1004 words) Term Paper
business Environment Demand and Supply
2. If the price of Snickers increases, then the substitute for the Mars bar has become more expensive. As a result at each price, people will buy more Mars bars. Therefore, at each price there will be a higher quantity demanded of Mars bars. So the demand for Mars bars will increase. In figure 2 suppose the initial demand curve at the old price of Snicker bars is D0. This curve shows at price ?0.6 per unit of Mars bars, Q1 units are demanded. Now if the price of Snickers bars goes up, at the same price of Mars bars, more units are demanded. So, the demand curve shifts up to D1. In this new...
6 pages (1506 words) Assignment
Demand and Supply
People specialize in the production of goods and services - or more existentially, as dictated by their environment, heredity, and/or fate in order to alleviate human suffering [their own existence included]. In the process of pursuit of own self-interests to satisfy needs and wants, individuals succumb to the unintended, invisible market forces that compel others to react by supplying necessities to make life even better in an engagement that leaves interactive parties better off as oppose to having excesses of what one produces in abundance, thus the very essence of efficient allocation of...
6 pages (1506 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!