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In order for a market economy to operate, there are producers and then there are consumers on either end of the spectrum. After production, the products that are in demand are supplied by producers to consumers. This, in a nutshell, is the law of supply and demand.
Supply means the number of products that can be produced by a market. The meaning of demand, on the other hand, is the capacity of consumers to purchase products that are available in the market. The premise of all theories in economics is on the two potent market phenomena of demand and supply. In other words, both demand and supply are from the underlying principles of a majority of theories and concepts of economics.
The law of demand and supply is an explanation of the prices at which products are sold. The cycle begins with products that consumers want on-demand. As demand for products rises, the prices of products that producers or suppliers sell also go up. In other words, prices charged by producers or suppliers for products are inflated with a rise in demand.
The lure of making a huge profit due to high prices is a motivator for producers to manufacture products so that the demand can be met. The assumption of demand is that, as prices escalate consumers for products would dwindle which would lead to demand remaining unfulfilled.
So that demand can be fully met a price has to be charged by producers that would not only enable requisite sales but would be profitable for producers or suppliers as well.
It’s a continual process to achieve a price known as the market-clearing price through which demand is met and at the same time, there is a substantial margin of profit for the organization. The market is in a state of equilibrium when both supply and demand are balanced.
When there is equilibrium, utilization of resources efficiently is optimal. Economics is a subject that studies the ability of market economies to achieve optimal equilibrium. Hence, analysis of the relationship between supply and demand assignment answers is vital for economists. To know about how pestle analysis example is conducted, click here.
Through the law of supply and demand, certain, behaviour of producers and consumers in a market economy can be explained. Behaviour can even be predicted and thus, economic results. Producers, who aim at obtaining the maximum price possible for their wares, manage inventory according to preset guidelines and make an investment in an advertisement so that consumers are encouraged to pay the price.
Consumers, for whom cheap prices are the one and only criterion and priority, quality or how well-known a product isn’t, explore a cheap discount shop. Those who value the reputation of a product more than price, buy products from the retail shop.
The law of supply and demand extends beyond product sales. It’s applicable in any economic scenario;
- job market
- college enrolment
- government initiatives and
Hence, the crux of the matter is that supply and demand paper assignment theory is undeniably and evidently vital to the very basis of economics as a subject.
The tutors at Assignments4U mentor students on homework or assignments when a solution is sought. When students are given demand and supply homework help is required to a great extent. Hence, our tutors have been providing demand and supply assignments help to students.
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