theory of supply and demand is the basis of the market model, which prevails in most developed countries.The relative simplicity of language, good visibility and predictability has led to the fact that this concept has gained immense popularity among scientists and economists around the world.
foundations of the theory of supply and demand were laid famous advocates of the market economy by Adam Smith and David Ricardo.Later this concept was supplemented and improved until it has acquired a modern look.
theory of supply and demand based on a few basic concepts, key among which are, of course, supply and demand.Demand is a significant economic value which characterizes the need of consumers to a particular product or service.
Scientists have identified a number of classifications in demand.For example, there is demand for an individual, that is, the need for the individual citizen in a particular product on the market in question, and the total, ie the total amount of demand for certain goods and services in the country.
In addition, demand is primary and secondary.The first is a clear need for the selected category as a whole.Second, the demand points to the interest in the products of a particular company or brand.
theory of supply and demand determines the latter as the quantity of goods on the market at a particular time that producers are willing to sell.It should be noted that the proposal, as well as demand, and can be individually combined, the latter assumes the form of the proposed total amount of goods in the country.
main factors of supply and demand can be divided into several groups.The first should be those that are not directly dependent on the activity of buyers and manufacturers.First of all, the overall socio-economic situation in the country, the state policy in the sphere of production and consumption, competition, including from foreign organizations.
The internal factors include the extent of the manufacturer's products competitive, how well maintained pricing and marketing policies, as well as the level and quality of advertising, income levels, changes in indicators such as fashion, taste, preferences, habits.
main laws on which is based the theory of supply and demand, are the laws of these economic categories.Thus, the law of supply states that quantity, under certain fixed conditions, increases if there is a decrease price for this product.That is, the quantity demanded is inversely proportional to the price of goods.
Act proposal, by contrast, establishes a direct relationship between the amount of supply and price: under certain conditions, constant increase in the price of goods leads to an increase in the number of proposals in this market.
Supply and demand are not separated from each other and are in constant interaction.The result of this process is the so-called equilibrium price at which the demand for this product is fully consistent with the proposal.
