Wednesday, July 05, 2006
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39th CTP (OMG)
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Join Date: Jan 2006
Location: Karachi
Posts: 134
Thanks: 1
Thanked 176 Times in 44 Posts
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Supply and Demand
Hi dear fellows,
Supply and Demand
Relationship between the quantity of a commodity that producers have available for sale and the quantity that consumers are willing and able to buy.
Demand depends on the price of the commodity, the prices of related commodities, and consumers' incomes and tastes. Supply depends not only on the price obtainable for the commodity but also on the prices of similar products, the techniques of production, and the availability and costs of inputs. The function of the market is to equalize demand and supply through the price mechanism. If buyers want to purchase more of a commodity than is available on the market, they will tend to bid the price up. If more of a commodity is available than buyers care to purchase, suppliers will bid prices down. Thus, there is a tendency toward an equilibrium price at which the quantity demanded equals the quantity supplied. The measure of the responsiveness of supply and demand to changes in price is their elasticity.
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["Satisfaction is death of Struggle"]
[Naseer Ahmed Chandio]
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