RECEL ANN M.

RIVERA OCTOBER 15, 2021

The schedule of quantities of an item or service that people are willing and able to buy at various prices is

referred to as demand. Demand is based on requirements and wants, while a customer may be able to distinguish

between the two, an economist considers them to be the same thing. The ability to pay is also a factor in demand.

You don't have an effective demand if you can't pay for it. When an item's price rises, the quantity demanded

decreases, and when the price lowers, the quantity demanded increases. The law of demand can be used to express

this inverse relationship: When a product's price is reduced, more people want it; when it is increased, less people

want it. There is an implicit assumption that no other parameters have changed. Demand is influenced by a variety

of factors other than price, including income, the pricing of complementary goods and services, tastes and

preferences, and price expectations.

Individuals and markets are both subject to the law of demand. Individual demand is the demand of a single

person or company. It represents the amount of a product that a single consumer would purchase at a certain price

point and at a given period. Individual demand is determined by a person's desires as well as the quantity of things

he or she can afford at a given price point. It assumes two things: that a person prefers more to less, and that his

likes or preferences remain consistent throughout time. The schedule of amounts that everyone in the market would

buy at different prices is known as market demand. The total quantity demanded by all consumers is determined by

market demand. To put it another way, it represents the sum of all individual needs. Market demand can be divided

into two categories: main and selective. The entire demand for all of the brands that represent a certain product or

service, such as all phones or all high-end watches, is known as primary demand. Demand for a specific brand of

goods or service, such as the iPhone or a Michele watch, is known as selective demand. A shift in consumer

willingness to purchase a certain commodity or service, regardless of price fluctuation, is referred to as a change in

demand. A shift in income levels, consumer choices, or a different price being offered for a related product could

all be factors in the change. When people's appetites for goods and services change, even though prices stay the

same, this is called a shift in demand. When the economy is doing well and salaries are rising, customers may be

able to afford to buy more of everything. While the quantity sold grows, prices will remain stable, at least in the

short run. An increase in demand is defined as an increase in the quantity of goods that people are willing and able

to purchase at various prices. When demand falls, consumers are prepared to buy less at each price point. A

movement in the entire demand curve, driven by a multitude of causes, is referred to as a change in demand. The

entire demand curve shifts left or right in this situation. A change in quantity wanted is a shift along the demand

curve that is solely due to a price change. The demand curve does not alter in this situation; rather, we travel along
RECEL ANN M. RIVERA OCTOBER 15, 2021

the existing demand curve. What Causes Demand Changes? Depending on the nature of the product, when a firm

changes the price of a product, the price change can affect demand. Demand is influenced by a variety of factors,

including taste and preference. Businesses frequently employ marketing efforts to try to persuade you to switch

from one product to another. This may result in a demand shift outward. Demand might also be influenced by

expectations. For example, if a customer expects her income to rise or fall in a certain period, her purchase patterns

may vary.

When economists discuss supply, they are referring to the amount of an item or service that a producer is

willing to provide at each price point. The price is the amount received by the producer for selling one unit of a

good or service. A price increase nearly always results in an increase in the quantity of that good or service given,

whereas a price decrease results in a decrease in the quantity supplied. When the price of gasoline rises, for

example, profit-seeking companies are encouraged to do the following: expand oil exploration; drill for more oil;

invest in more pipelines and oil tankers to transport the oil to plants where it can be refined into gasoline; construct

new oil refineries; purchase additional pipelines and trucks to transport the gasoline to gas stations; and open more

gas stations or keep existing gas stations open longer hours. The law of supply is the term economists use to

describe the positive relationship between price and amount supplied, in which a higher price leads to a higher

quantity supplied and a lower price leads to a lower quantity supplied. The law of supply assumes that all other

factors are equal. Because the price on the vertical axis and quantity on the horizontal axis of demand and supply

curve graphs are the same, the demand and supply curves for a particular commodity or service might show on the

same graph. Demand and supply work together to determine the price and amount of goods bought and sold in a

market. When two lines on a diagram cross, it usually indicates something. The equilibrium is defined as the point

where the supply and demand curves cross. The equilibrium price is the only price at which consumers' and

producers' plans coincide, that is, when the amount of product consumers want to buy or the quantity demanded

equals the amount producers want to sell or the quantity provided. The equilibrium quantity is the name given to

this common quantity. The quantity demanded does not equal the quantity provided at any other price, hence the

market is not in equilibrium. "Equilibrium" is a term that implies "balance." There is no motivation for a market to

shift away from its equilibrium price and quantity if it is at its equilibrium price and quantity. If a market is not in

equilibrium, however, economic pressures emerge to shift the market toward the equilibrium price and quantity.

In conclusion, a demand schedule is a table that displays the quantity demanded in the market at various

prices. On a graph, a demand curve depicts the relationship between quantity requested and price in a specific
RECEL ANN M. RIVERA OCTOBER 15, 2021

market. According to the law of demand, a greater price usually results in a smaller amount required. A supply

schedule is a table that displays the quantity of goods available at various market prices. On a graph, a supply curve

depicts the relationship between amount delivered and price. According to the law of supply, a greater price

usually results in a bigger amount supplied. The supply and demand curves cross, resulting in the equilibrium price

and quantity. When the quantity demanded equals the quantity given, the balance is reached. The amount required

will exceed the quantity provided if the price is below the equilibrium level. There will be an overabundance of

demand or a scarcity. The quantity supplied will exceed the quantity required if the price is above the equilibrium

level. There will be an excess supply or surplus. In either case, economic pressures will push the price toward the

equilibrium level.