Economics Basics: Demand and Supply
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the
backbone of a market economy.
Demand refers to how much (quantity) of a product or service is
desired by buyers.
The quantity...
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Economics Basics: Demand and Supply
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the
backbone of a market economy.
Demand refers to how much (quantity) of a product or service is
desired by buyers.
The quantity demanded is the amount of a product people are willing to buy at
a certain price; the relationship between price and quantity demanded is known as the demand
relationship.
Supply represents how much the market can offer.
The quantity supplied refers to
the amount of a certain good producers are willing to supply when receiving a certain price.
The
correlation between price and how much of a good or service is supplied to the market is known
as the supply relationship.
Price, therefore, is a reflection of supply and demand.
The relationship between demand and supply underlie the forces behind the allocation of
resources.
In market economy theories, demand and supply theory will allocate resources in the
most efficient way possib
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