Understanding Supply and Demand: Impact on Prices and Markets, Monografías, Ensayos de Ética

¡Descarga Understanding Supply and Demand: Impact on Prices and Markets y más Monografías, Ensayos en PDF de Ética solo en Docsity! Servicio Nacional de Aprendizaje - SENA. Reservados todos los derechos 2012. SUPPLY AND DEMAND 1. Vocabulary Variable Definition Demand Combination of desire, ability, and willingness to buy a product Law of demand Rule stating that more will be demanded at lower prices and less at higher prices; inverse relationship b/w price and quantity demanded Microeconomics Branch of economic theory that deals with behavior or decision making by small units such as individuals or firms Demand schedule Listing showing the quantity demanded at all possible prices that might prevail in the market at a given time Substitutes Competing products that can be used in place of one another; products related in such a way that an increase in price of one increases the demand for the other Supply Schedule of quantities offered for sale at all possible prices in a market Law of supply Rule stating that more will be offered for sale at high prices than at lower prices Supply schedule Tabular listing showing the quantities produced or offered for sale at each and every possible price in the market SUPPLY AND DEMAND Servicio Nacional de Aprendizaje - SENA. Reservados todos los derechos 2012. 2. Reading Supply and Demand In the business world, it’s common to hear and see references to supply and demand. With that said, few individuals possess a thorough understanding of the idea and its wide-ranging impact on markets, prices, and consumers. In short, supply and demand refers to the force of consumers (or how much customers want or need to buy something) in relation to the available supply (or how much of something companies are able to sell). Generally speaking, high demand results in limited supply and increased prices, and low demand results in an ample supply and decreased prices. This latter phenomenon - the correlation between supply and demand and prices -might sound confusing at first, but it’s actually rather simple. When there isn’t enough of something available for sale to satisfy demand (or so that everyone who wants this “something” can simply purchase it), manufacturers, or businesses that produce a product or products, charge more; they are able to do so because they aren’t faced with competition (as whatever they’re selling is in demand and presumably not offered by many other businesses), and customers are willing to pay more to secure said product. Inversely, if something is available in abundance, companies will have to contend with competition, or actions taken by a company that’re designed to improve its market standing, sales, and ultimately, profits. An example will make the concept of supply and demand entirely clear. Imagine that a company creates a fantastic video game system that many customers want to buy. Demand will build both naturally and as the product isn’t available to buy (this marketing technique is utilized by many companies today; not being able to purchase something seems to create consumer buzz), and if the supply doesn’t increase to give every willing customer a system, prices will rise. In other words, if customers have no other way to buy the system than through its manufacturer, and are having a hard time finding the system to buy, they’ll be willing to pay more to buy it. On the other side of the coin, a product that’s not proprietary, is widely accessible, and can be sold by any company - pasta, for instance - will be manufactured, marketed, and sold by a number of businesses. One company might sell a box of pasta for $10, and another company could respond to this price by selling their own pasta for six dollars, and another company