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Essay on Supply, Demand and Pricing
Introduction
The laws of supply, demand and pricing are the most fundamental concepts in economics that relate the supply condition or the availability of a commodity or service to the demand for that commodity and service so as to fix the price of that commodity or service in a free market economy. If the demand or the need for a commodity or service is high and the ability to manufacture, process or supply the commodity or service is poor, there are likely to be more buyers who will be willing to pay a higher price to purchase the commodity or service that is required. Thus, poor supply conditions with high demand conditions result in higher prices, while an excess of the commodity or service in poor demand conditions will result in a lowering of the prices in an effort to boost consumption (Marshall, 1975).
The laws of supply demand and pricing can be seen in action nearly everyday in any market, region, locality or neighborhood. From the supply of potatoes, the rents of apartments to the demand for skills and employees etc, all depend on the demand and supply condition in order to determine the prices of potatoes, particular class of employees or rentals for apartments. Many news items reporting the supply demand and pricing of products or services are published every day in the popular press because such news can be of great importance to many individuals whose lives may be considerably impacted by such fluctuations. Industries that depend on the processing of raw materials to turn them into finished products may be greatly affected by changes in the prices of a number of raw materials or components that may be required for a finished product that is then sold on the market in large quantities.......
