market called competitive form of linking economic entities.The market mechanism is considered to be a mechanism of mutual relations and actions of the main elements of the market, which include supply, demand, price, competition, the basic elements of the laws of the market.The mechanism of the market satisfies only the needs of society, which are expressed through demand.The interaction of market demand and market supply is a major component of the relationship between buyers and sellers, as well as between consumers and producers.
What is the demand?Demand
called solvency requirement for specific products or services.
quantity demanded is a number of products and services that buyers are willing to purchase at a given time in a given place and at a specified price.
need for any welfare implies the desire to possess goods.Demand implies not only a desire, but also the opportunity to purchase at prices which are established on the market.
Types of supply and demand:
- market;
- individual;
- production;
- consumption.
Supply and demand in the goods are determined by many factors, both price and non-price.Consider them all.
Factors that affect demand:
- advertising;
- product availability;
- usefulness of the product;
- fashion and taste preferences;
- consumer expectations;
- amount of income;
- natural conditions;
- political situation in the state;
- change preferences;
- price, which is mounted on interchangeable products;
- population.
bid price - is as large as the price the buyer can pay for goods or services rendered.
Demand can be exogenous and endogenous.The first is this kind of demand, which is influenced by external factors and government intervention.Endogenous also called domestic demand, its peculiarity is that it is formed within the society.
Demand is a query of existing or potential customers, as well as groups of consumers according to their monetary capabilities for a particular purchase.The need for this or that product is a reflection of market demand.
nature of the law of demand is simple.In other words, the higher the price of the product, the less the consumer can afford, and vice versa (the rate of the same amount of money).However, in practice a bit more complicated: first, the customer can replace goods (called substitute products), and secondly, it can add the money to buy a certain number of products.
law of supply law of supply and demand is an economic law that determines how much depends on the volume of demand and the volume of supply of products from their prices.Alfred Marshall finalize the law in 1890.
When the price increases for certain products, but other parameters remain the same as before, demand will begin to be brought to a smaller number of products.
interaction of supply and demand on the market sets the prices for the products.
elasticity of demand - what is it?
This concept refers to a figure that expresses the fluctuations in aggregate demand.These fluctuations are often caused by changes in pricing policy in relation to the product or service.Elasticity of demand - is the one that was formed with the proviso that the change in volume (in percentage terms) exceeds the drop in prices.
In the event that index lower prices and higher demand (as a percentage) are the same, in other words, the growth in demand in the state only to compensate for the fall in prices, the elasticity is equal to one.
In another case, if the fall in prices exceeds the demand - demand is inelastic.
The conclusion: the elasticity of demand - it is an economic term that characterizes the sensitivity of consumers to changes in prices of products.This phenomenon also depends on household income.Hence the classification of elasticity: the price and income.
reaction of buyers to price variability is a strong, neutral and weak, each of which creates a single view of demand: a flexible, non-elastic and perfectly inelastic.
There are a number of products with different price elasticity.Products such as bread and salt, are the most successful examples of inelastic demand.Here, no increase or decrease in the price of this product does not affect the number of consumers.
Sellers and manufacturers use the term flexibility for their own purposes.If the index is high enough, they go to the sharp decline in prices in order to increase sales.Accordingly, they get more profit than if prices were higher.
For products in which the low level of elasticity, it is impossible to reduce prices and increase output.In this case, there is no economic benefit.
When the market has a large number of sellers, the demand for any product is elastic.Therefore, in the case of price increases in some buyers purchase goods from others.
demand curve The demand curve is designed to show the number of products that might sell for a given time at a given price.The higher the elasticity of demand, the price may be higher.
demand curve is a graph that illustrates the relationship between the number of consumers who want to buy goods, and the price set on him.
demand curve depicted in total for all customers, but taking into account each separately.Sometimes this graph is not presented as a curve a, for example, in the form of straight lines.It depends on the market situation.
often demand curve is considered in conjunction with the supply curve, it gives the full picture.Schedule can fully describe the situation on the market.Supply and demand curves at the intersection of giving the market equilibrium price.This, in turn, regulates and stabilizes the relationship between buyers and sellers.
What is the offer?
interaction of supply and demand - is an essential process of the economy, which is characteristic of all developing countries.
impossible to objectively analyze the market mechanism without the offer.It is what characterizes the economic situation in the market from the sellers, not buyers.
Proposal is a collection of products and services that are on the market that are sold at a given price.
quantity supplied is a number of products and services that vendors offer at a given time at a given price, but the value of the offer is not always equal to the volume of production or sales.
offer price is approximately the minimum price at which a seller is willing to give their goods.
economic situation in the market can be characterized volume and structure.They also affect the production and pricing.All products that are on the shelves of merchants, and even those that are still on the way, belong to commodity supply.
volume of supply is directly linked to the price.In that case, if the price is low, the lower part of the goods sold (most remained in storage), and if the price reaches the maximum level, and the output appears significantly greater.In this case, in the course are even defective products.
There are three slots, which studied the proposal.Up to a year - a short-term, from one to five - the medium-term, and more than five years - a long-term.
volume of supply is called the amount of goods which sellers are willing to sell at a time.
law proposal is as follows: the volume of goods increases with an increase in prices and also decrease if the price decreases.
change in supply and demand is due to many factors.First of all - the change in prices for these products, or the one that you can replace it.It is also influenced by the volume and cost of production.
have proposals like the demand, there are non-price factors.These include:
- entry of new firms;
- natural disasters;
- war or other political activities;
- production costs;
- predictable economic expectations;
- price changes in the market;
- modernization of production.
huge influence technological progress.It reduces production costs, speeds up and simplifies the work.
Proposal called economic phenomenon in which the seller is willing to realize their goods on the market at fixed prices.On it, as well as on demand is influenced by many price and non-price factors.Among them:
- presence on the market of substitute products;
- complement goods (complementary);
- new technologies;
- taxes and subsidies;
- resource usage;
- availability of raw materials;
- natural conditions;
- market size;
- expectation of goods / services.
Act offers
volume of supply increases and prices for products.This law is valid only if the price increases, together with the production of goods and the seller (manufacturer) is starting to get more profit.The real economic picture is more complicated, but these tendencies are inherent.
proposal determines the demand, and demand determines supply.Karl Marx thought so.Today, his theory as relevant.The proposal is capable of forming the demand due to the range of products and prices, which are set on it.In turn, the demand is determined by the amount and structure of the product offering.This is because in the course are those products that are most consumed.
process in which this product is installed at such a price that can satisfy both the buyer and seller, - the interaction of supply and demand.
elasticity of supply
This figure, which reproduces change proposals together, occurring due to the rise in prices.In that case, if the increase in offers of more growth in prices, it is characterized as elastic (elasticity of supply above the unit).If the growth of supply is higher prices, the proposal called the unit, respectively, the same figures.And as if the increase in supply smaller price increases, then the offer is inelastic (elasticity of supply is less than one).
Will offer flexible, or vice versa, depending on several factors:
- features of manufacture of the product;
- duration of storage;
- time spent on manufacturing;
- hour factor.
interaction of supply and demand helps to set the right price for the products, thus defines the relationship between the consumer and the manufacturer.
Offer may change:
- market prices (in particular substitute products);
- taxes;
- production costs;
- consumer tastes;
- scientific and technological achievements;
- number of producers;
- expectations imposed by manufacturers.
interaction of market demand and market supply - a process in which an equilibrium price that satisfies both buyers and sellers.
supply curve
supply curve characterizes the value of the goods sold at different prices, but at this point in time.
Schedule proposal shows the ratio of market price to the quantity of products, which offer manufacturers.Most of this curve affects the production costs.It is possible to produce more products to increase profits.Another factor that affects the schedule of proposals - a technological and scientific progress.Improved production techniques allow you to work faster and spend less raw materials and human resources.
Schedule of supply and demand is needed in order to fully portray the situation in the market.It helps to understand the price policy, set the desired output and create profitable plan for manufacturers and sellers.
In order to depict the supply and demand equation, linear functions are required.You need to know two points, to build them.To find them represented by a curve of demand and supply, their dependence on the price and quantity of products.Point at the intersection of graphs and the solution.It is called an equilibrium point.
interaction of market demand and market supply - an economic process which generates the formation of a market price that satisfies both buyer and seller.
supply and demand factors are those that affect their value.Main for both indicators - the price of goods.However, other non-price factors.
market equilibrium is called the phenomenon in which the same level are indicators such as demand / supply.The equilibrium price - the price at which the magnitude of these same parameters.In other words, the price at which the manufacturer offers a certain number of goods, and all of his customers purchase.This phenomenon in the economy is extremely rare, and this time the supply is equal to demand.
was understood the law?
the first time in the fourteenth century raised the issue of interaction of supply and demand.Muslim historian and philosopher and social thinker of the Arab countries came to realize that the more exclusive products, which is also in great demand, the higher the price for it.The name of this philosopher Ibn Khaldun, he became the founder of the law of supply and demand.
further his idea was developed in the sixteenth century in the writings of the Spanish economist Juan de Matenso.He described the theory of subjective value of goods, which leads to discrimination concepts of supply and demand.He also introduced the concept of "competition" to describe the trading and competition in the markets.In his numerous works identified several factors that affect the pricing.
How to find the levels of supply and demand
First we need to set the current price.Levels of demand are in the descent of the price ladder, and the level of supply, on the contrary, when climbing it.Next you need to determine the strong and rapid price movement.For demand - rapid growth, to offer - a decrease.Following is a source of movement.We demand it from the bottom, from the top deals.At the end of the level lines circled above and below the graph.
After the levels are set, the manufacturer is free to enter the market and not be afraid of the onslaught from competitors or ruin.
interaction of market demand and market supply helps to set prices, regulate the situation in the market and even affect the economic situation in the country.
In today's economy, consumers tend to buy more goods at competitive prices.And on the other side of the fence is a manufacturer who also wants at a good price to sell their goods.Thanks to the researchers and economists who study the supply and demand, the market is able to function normally.To achieve equilibrium, they analyze a huge number of factors which to some extent affect these processes.
