Supply and Demand :: Economics Econ 101

Supply and motivationSupply and demand is defined as the relationship between the mensuration that producers wish to sell at various prices and the measurement of a commodity that consumers wish to buy. In the functioning of an economy, deliver and demand plays an important voice in the economic decisions in which a company or mortal may make. The quantity of a commodity demanded depends on the price of the commodity, the prices of altogether other commodities, the incomes of the consumers as come up as the consumers taste. The quantity of a commodity supplied depends on the price obtainable for the commodity as well the price obtainable for substitute goods, the techniques of production, the cost of labor and other factors of production. It is supply and demand that causes a merchandise to reach equilibrium. If buyers wish to purchase much of a commodity than that of which is available at a given price, therefore the price testament to tend to rise. If they wish to pur chase less of a commodity than that of which is available, so 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 often tend to be scarce so that there is always competition. The term invisible hand is the natural contract 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 almost free of debate. There would be no market to determine set prices for any type of commodity. Therefore, many companies and individuals would regress out on