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Economics - Supply & Demand

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Phase 1 IP – Intro to Economic Thinking
Frank K. Chadmon
Colorado Technical University Online
Professor Olanrewaju
November 25, 2013

The mixing of supply and consumer demand is very important to consumers because the combination of these two typically sets the price of a good or service. The final market price is dependent upon both of these components of a market. When buyers and sellers agree on a price, that’s called the equilibrium price. For consumers and sellers, the law of supply and demand is a rule of thumb that holds true in the market. With other things being equal, price and the quantity demanded are inversely related; this means the greater the demand for a product or service, the higher the price and lower the demand for a product or service, the lower the price. Other things being equal, refers to factors that can affect demand, such as the availability of substitute goods or changes in consumer tastes. This analysis will provide a discussion of how supply and demand affects consumers, especially with respect to price, availability of goods or services. In the law of supply and demand, the quantity demanded is distinct from demand, which refers to the entire relationship between price and quantity demanded. There are a number of factors that affect both supply and demand and, as a result, consumers. When demand or supply for a good or service changes, the equilibrium price for the good or service changes also, so changes in demand or supply always have an effect on consumers where price is concerned. There are a number of factors that affect demand; these factors include income, prices of related goods (substitutes & complements), and population, demographics & consumer expectations. Demand shifters include basically any factor that impacts the willingness or ability of consumers to buy a particular good or service. Changes

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