Supply and Demand :: Economics Econ 101

Supply and DemandSupply and demand is be as the relationship between the quantity that producers wish to sell at various charges and the quantity of a commodity that consumers wish to buy. In the functioning of an economy, supply and demand plays an important role in the economic decisions in which a company or individual may make. The quantity of a commodity demanded depends on the value of the commodity, the prices of all other commodities, the incomes of the consumers as comfortably as the consumers taste. The quantity of a commodity supplied depends on the price obtainable for the commodity as well the price obtainable for backup goods, the techniques of production, the cost of labor and other factors of production. It is supply and demand that causes a commercialise to reach equilibrium. If buyers wish to purchase more of a commodity than that of which is gettable at a given price, then the price will to prevail to rise. If they wish to purchase less of a commodity tha n that of which is available, then the price will tend to drop. Consequently, the price will reach equilibrium at which the quantity demanded is just equal to the quantity supplied. The resources needed to supply commodities a lot tend to be just now so that there is always competition. The bourne invisible hand is the natural force that guides the market to this competition for scarce resources. Without the invisible hand theory then there would be no competition for resources thus creating a market where prices would be determined around free of debate. There would be no market to determine position prices for any type of commodity. Therefore, many companies and individuals would lose out on