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Essay on Supply, Demand and Price
Supply and demand is considered as two most vital indicators of economy, which play an important role in controlling the prices of goods and products available in the market. Demand shows the desire level of people for a specific product or the quantity of a good requested by them, which they are willing to buy at a certain price. This relationship between price and amount demanded is known as the demand relationship. On the other hand supply shows the quantity of goods producers are willing to produce on receiving a certain price. The relationship between price and quantity of a good supplied to the market is known as the supply relationship.
Price shows the interaction between supply and demand and the market price depends on both these factors. Trade of products and services usually occur when both consumers and producers agree on a price. This agreed upon price is known as equilibrium price or market clearing price. On the other hand, market that does not clear at any given price is forced to change the price of goods, the quantity produced or the quantity demanded.
Supply and Demand both is influenced by a certain number of Factors. Demand of any good depends on its price, income of consumers, price and availability of substitute goods available in the market and taste of the buyers. On the other hand supply of any good depends on the price, cost of manufacturing the good, availability of alternate goods generated by the manufacturers using the same raw material and unconditional circumstances affecting the production and supply of goods. All these factors are adjusted in such a way that a balance is created between both these market indicators so that one thing does not exceed the other.......
