...Supply refers to what the seller is willing and able to offer for sale or rather it refers to the quantity of a commodity offered for sale. Now coming to the law of supply…it describes the supply behaviour of the seller or tendency of sellers in offering their stock of commodity for sale in relation to varying prices of the commodity. It states, other things remaining constant, higher the prices, higher is the quantity supplied and vice versa. Now to make our discussion more concrete let us look at a specific market. A market for real maple syrup, in Witchita, Kansas. Here the buyers are all residents of Witchita n sellers are maple syrup producers in Usa. To explain the changes in supply we look at the following supply schedule where as the price per bottles of maple syrup increases from$1 to $5…the quantity supplied by the producers increases from 2500 to 6500 bottles. Thus we see as the price increases the quantity supplied also increases .At price $2 per bottle quantity supplied is 4000 bottles but as price rises to $4 per bottle quantity supplied rises to 6000 bottles….thus we get the supply curve which is nothing but a graphical representation of the supply schedule, a curve showing quantity of maple syrup bottles supplied at various prices per bottle, with all odr variables held constant. Thus price and quantity supplied is positively related as we get an upward rising supply curve as evident from the figure. Now we come to the movement along the supply curve…this refers...
Words: 586 - Pages: 3
...Supply, Demand, and Price Elasticity Supply and demand factors in many characteristics. Any product or service is involved in supply and demand. Milk is a product that is affected by the supply and demand aspect of economics. Several characteristics determine the causes for shifts in supply demand for milk. Milk is a product that almost everyone uses, and in most cases is viewed as a necessity. Milk is a product that will always be in high demand. This product is included in the food pyramid of healthy foods; therefore people will always want milk. There are however some factors that do affect the supply of milk. For example if a disease outbreak occurs in cows, the milk supply may drop. One aspect that has affected milk prices of in the past is Mad Cow Disease. Mad Cow Disease is an illness that has infected cattle since 1986. It is a disease that affects the brain. Since its first appearance in British dairy herds in 1986, BSE has affected roughly 200,000 cattle (Grace, n.d.). There was a more recent outbreak in America that caused cattle ranchers to put down several cows. As of November 2006, 3 individuals with mad cow disease had been identified in the United States (Kulger, 2006). Several cows were put down causing the supply of milk to decrease, because the supply decreased the price increased. The demand for milk stays virtually the same; people were just paying more for the product. People are willing to pay a higher price for milk because it is...
Words: 935 - Pages: 4
...Elasticity of demand is the measure of change in a product’s demand based on the price fluctuations, greater or lower. Cost-price elasticity is the measured change in demand of one product after the price change of a related product. In substitute products, the increase of price in one product will increase demand of the substitute product. In products that complement each other, the increase of one product will negatively influence the demand for the complemented product. Income elasticity is the measured response in the demand of a product based on the consumer’s income, both in increase or decrease. A normal good is described as the increase in demand when a consumer’s income is increased. Alternatively, an inferior product is defined as the decrease in demand of a product when a consumer’s income decreases. If a positive trend is realized, the product is labeled normal or superior, thus the opposite if a negative trend is captured, the label is inferior. All three of the above-mentioned economic terms are calculated in mathematical equations as follows. For elasticity of demand, Ed=∆Qd÷∆Pd, the elasticity of demand equals the percent of change in the quantity demanded divided by the percentage in the change of the price. If elasticity of demand is greater than one, then the demand is considered elastic. If less than one, then demand is inelastic. If the sum is equal to one, then a unit-elastic demand is realized. The income elasticity equation is, IEd=∆Qd÷∆I, or the income...
Words: 1121 - Pages: 5
...apartments in the city of Atlantis, we learned how the supply and demand curve moves back and forth and their relation to the equilibrium price. Depending on the health of an item or service that has an elastic price, the economy can and will directly effect the supply and demand of said product or service, and in this case two bedroom apartments. Two Micro and Macro Economic Concepts There are two concepts that stuck out to me in the simulation. One of them being prices, or pricing theories and the other being economic welfare. Based on supply and demand, the simulation showed how because of demand the prices on the two bedroom apartments can increase, especially if there is an influx in demand or a shortage in supply. In the opposite scenario, prices can decrease if demand is low and supply is high. This relates to economic welfare because is the economy is struggling, and then prices for two bedroom apartments are affordable. The pricing is elastic. Where as if the economy is in surplus, we experience inflation and the prices are higher and supply could be bleak. Shift in the Supply Curve There were multiple shifts in the supply curve within the simulation in the city of Atlantis. The supply shift that I took most interest in was when the IT and Biomedical companies started taking up residence in Atlantis. Suddenly, the population has increased the supply has stayed the same but the demand is now significantly...
Words: 1046 - Pages: 5
...Osborne Lopez Supply and Demand Simulation January 17, 2013 ECO/365 William Mason A number of factors, including price increases or decreases, cause changes in supply and demand. An incremental decrease in the rental price led to a huge increase in the demand for houses. Similarly, an increase in the rental price of two roomed apartments caused a decrease in the demand of houses by a significant margin. Suppliers were willing to supply more houses at higher prices and fewer ones at reduced rents (McDowell et al., 2006). A rise in the population of Atlantis led to a greater demand for housing which in turn contributed to the rise in rental prices as demand-outstripped supply. As a consequence, the suppliers were eager to supply more units at improved rental prices. When the population decreased, the demand for housing fell and the available units were leased out at low prices. Naturally, the suppliers were not very keen to supply all their units to the market at depressed prices. Available substitutes affect the demand and supply of a commodity. A number of people in Atlantis owned homes in the suburbs and did not need to rent houses in the town. The demand for houses dropped and this forced the suppliers to cut back on supply or reduce rents in bid to attract more clients. Consumer tastes and preferences affect the supply and demand of goods and services in the market (McDowell et al., 2006). When consumer trends shifted from two roomed apartments to detached houses...
Words: 869 - Pages: 4
...Laws of Supply and Demand Antoinette Mitchell ECO/365 August 30, 2014 Darrell Watts Laws of Supply and Demand The collaboration between the supply resource and the demand for a particular resource can affect the particular equilibrium price, quantity plus decision making of the consumer. If the supply is low and the demand is high, the price will be high. In dissimilarity, the larger the supply and the lower the demand, lower the price will be. Microeconomics vs. Macroeconomics The supply and demand simulation displays different facets of economic structures. Even though typically concentrated on microeconomics, the simulation shows a unimportant aspect of macroeconomics. The principles of microeconomics will apply to a drop in rent prices to escalate the supply being demanded. An additional microeconomic principle displayed in the simulation is the rise in demand if the cost of rent is dropped. Macroeconomics principles come into play when the rise in demand for apartment was a direct product of the founding of a new company in town. The same principles of microeconomics relate to a surplus supply generated by a price ceiling applied by the government. While navigating through the simulation I was a focused on supply and demand and how it relates to the housing market in the city of Atlantis. It was a challenge as a property manager of Goodlife Management, superintending properties and forming the correct decisions to provide appropriate costs with the new scenarios...
Words: 756 - Pages: 4
...Supply and Demand August 12, 2013 Eco/365 Chris Foster Introduction There were two microeconomics and two macroeconomics concepts in the simulation. Atlantis is a microeconomics apartment company which manage apartment complexes and homes in the city. Atlantis had one shift supply curve and one shift in the demand curve when business started moving into the city. These shifts affected the equilibrium price, quantity, and decision making with the demand needed to supply to consumers. I am applying what I have learned with supply and demand from the simulation to my management job with our rate increases. The concepts of microeconomics helps us understand the factors that affect shifts in supply and demand on the equilibrium price and quantity. The price elasticity of demand affects consumers purchasing and the firms pricing strategy with supply and demand. Microeconomics and Macroeconomics There were two microeconomics and macroeconomics concepts in the simulation. Atlantis is a rental company that manages the apartment and homes in the low populated city. The microeconomics concept in this simulation with Atlantis is the rental decision to maximize profit with decreasing vacancies. The property management company has consider the supply and demand of the apartments either by lowering the prices to increase rental occupancy or by raising the prices to maximize the cost of the rental inflation in the apartment complex. The macroeconomics...
Words: 755 - Pages: 4
...Simple Supply and Demand The utilisation of various products includes crore of millions of population, who individually can limited the power to effect the cost of goods, but combinedly have plenty of power to influence it. The solution will definitely won’t shock you: (Foreign countries) Saudi Arabia. But the very close runner-up might: The (USA)United States of America creates more than 11.11 million barrels every day, which can be more than 95% of what other foreign countries like Saudi Arabia produces. If comparing Russia which is close behind the (USA)United States. The world's 2nd largest economically rich country china, is a distant fourth. With oil's stature as a highly demand global product comes the possibility that various and major changes in cost of goods have a very significant impact on the economic of the country. The two basic factors that affect the cost of oil. (December 4, 2014) (Blitzer, December 4, 2014) * demand and supply * market condition Demand of oil The concept of supply and demand is not complicated.as supply falls (or demand rises) the price should go high.as demand falls (or supply rises) the prices reduces.an oil future contract is a agreement that gives the authority to buy oil in barrels at a predetermined price on a predetermined date in the coming future. (al-Naimi, April 20, 2015) Oil scarcity Oil scarcity can be caused by various factors,including technical limitations etc.this resources of oil is scarce when the supply exceeds...
Words: 3229 - Pages: 13
...Supply And Demand Aaron Harris XECO/212 3/25/2012 Kristin Paul Supply And Demand Supply and demand are the two words that economists most often use and there is a Good reason. Supply and demand is the engine that makes market economies Go. This determines the quantity of each good produced and the price point at Which it is sold. If you would like to understand how any event or policy will have an effect on the Economy, you must first think about how it will affect supply and demand. A market is a group of buyers and sellers of a certain type of good or service. The Buyers as a group determine the demand for the product, and the sellers as a Group determines the supply of the product. The good that I have had experience purchasing is a computer I will explain the factors that affect supply and demand with this good. There are many factors that I believe could cause possible changes in supply and demand for a computer. The first possible factor is changes in technology, within the computer industry; technology is fresh and moves faster than in any other industry. This also means that pioneering products are obsolete basically overnight. So, as product life-cycles are always decreasing, the value of rapidly bringing products to market is constantly increasing. In this lively environment, speed is crucial. So far, the computer industry has succeeded by using change to its advantage. This factors into how often I will have to buy a new program for my computer...
Words: 714 - Pages: 3
...CAR Explain factors that could cause possible changes in supply and demand. 1. Time of year - at end of year people want to wait for next model year. At beginning of year the current model in more demand than last year’s model. 2. Price of gas - SUV (gas guzzlers) become less desirable when gas is high. 3.Fad - going green is chic so hybrids and flex fuel and smaller cars are desirable. 4. Taxes - governments can given lower taxes or rebates to stimulate purchase and purchase of specific types. Cash for Clunkers removed any cars from the market since they had to be destroyed and new cars had to be bought. 5. Politics xenophobia- makes purchase of foreign cars less desirable. Anti-Indian or Chinese may make sales of there cars fall in the US. 6. By American fads campaigns by manuafactures; union; patroit groups. 7. Bad news about product- run away Toyotas and the jokes on the Letterman and Leno shows. Substitutes: Truck; bicycle; motorcycle; public transportation; ride share; sharing car with others (like a time share). Complements are parking space; ski/bike rack; extended warranty; insurance; stereo system; gps; alarm system; vanity license plate; custom paint; trailer hitch; sexy rims. Most people require one car so you must by a new one or a used one. It not likes a pet rock where we can all walks away from buying one. There will be a residual market (demand) at all times but probably never zero demand, Example: The competitive market that we face today has...
Words: 898 - Pages: 4
...Supply, Demand, and Price Elasticity Team C-Carefree Challengers Kimberly Badgley, Randall Coakley, Stacy Engram, Misty Landwehr, Geneva Krager, and Gregory Minor ECO/212 September 13, 2010 Dr. Lyn Bush Supply, Demand, and Price Elasticity Introduction. (Misty) Changes in Supply and Demand (Kimberly) According to Hubbard and O’Brien (2010), the demand side of the curve influences by not what a customer wants to buy but what a buyer is willing to purchase. The demand curve shows the association between the price of a product and the amount of the product demanded. When the value of merchandise falls, the demand increases. Further, income, prices of a related product, tastes, population and demographics, and estimated future prices cause the change in demand (Hubbard & O’Brien, 2010). Income is relevant when a person cannot afford a product because of a lack of income. The prices of a related product or substitution will motivate a person to buy the cheaper of the two products. Tastes are what a person is willing to buy by his or her preference. Population is significant because if a product is popular, then more people will want to buy that product. If a person suspects prices will increase, then he or she will buy now, but if a person suspects prices will decrease, he or she will wait until the prices come down. Supply is the quantity of a good or service that a company is willing and able to supply at a given amount (Hubbard & O’Brien, 2010). The...
Words: 1580 - Pages: 7
...Microeconomics and the Laws of Supply and Demand Introduction of Micro and Macro Economics Microeconomics and macroeconomics are used in order to help economists come to conclusions and the economy of a city, state, and country. Microeconomics is the study of the economic decisions and actions of individual people and companies according to the Merriam-Webster dictionary (Merriam-Webster, 2014). This practice is the study of economics on a small scale where macroeconomics will study the whole system (Merriam-Webster, 2014). Principles and Concepts The simulation provided for an in depth experience into an example of supply and demand in the housing market. GoodLife Management is the only apartment owner in the city of Atlantis, because of this GoodLife has a monopoly in this market. This monopoly allows more control over the pricing structure of the apartment living in Atlantis with little outside influence. Even with a monopoly there are a few things that can enhance or diminish the pricing structure of apartment living. An example given was the current state of the economy which did not provide enough income to fill the housing units with the higher rental rates therefore the rates had to be lowered in order maximize profits. Although the state of the economy as a whole is macroeconomic, the cause forces a microeconomic change in the rental rate (University of Phoenix, 2003). The simulation also creates a supply change by building new apartment complexes, which...
Words: 711 - Pages: 3
...Supply and Demand Many factors can lead to the change that takes place in a demand curve corresponding to a new relationship between quantity demanded for ice cream and the price of it. The shifts in demand can be resulted from the prices of other products available in the market, the income available, the customer’s tastes and preferences. First of all, the decrease in price of substitutes to the ice cream will affect the quantity demanded for the ice cream. Smoothies, for example, can be a good substitute for ice cream because they have similar creamy and cooling taste with different flavors. Suppose that the smoothie shop on campus recently launches a “buy one- get one for free” sales campaign. It may attract more customers who would otherwise demand for the ice cream. Secondly, the disposable income of the students, faculty and staff on campus may contribute to the fluctuation of the demand for ice cream. At the beginning of the month, there is likely to be an increase in demand for ice cream because this is usually the time people get paid. It is therefore reasonable to suggest that the store will run short for ice creams at the beginning of the month. The ice cream store might go through the days when the ice creams remain unsold because consumers tend to be tight in budget by the end of the month. Thirdly, the customer’s tastes and preference is also a factor influencing the sales fluctuation. Based on a recent customer survey, the store realizes that one reason preventing...
Words: 382 - Pages: 2
...Answers to in-text Questions in Economics (5th edition) Chapter 1 Page 4 ( Could production and consumption take place without money? If you think they could, give examples. Yes. People could produce things for their own consumption. For example, people could grow vegetables in their garden or allotment; they could do their own painting and decorating. Alternatively people could engage in barter: they could produce things and then swap them for goods that other people had produced. ( Before reading on, how would you define scarcity? Must goods be at least temporarily unattainable to be scarce? See page 2 of text for a definition of scarcity. Goods need not be unattainable to be scarce. Because people’s incomes are limited, they cannot have everything they want from shops, even though the shops are stocked full. If all items in shops were free, the shelves would soon be emptied! ( If we would all like more money, why does the government not print a lot more? Could it not thereby solve the problem of scarcity ‘at a stroke’? The problem of scarcity is one of a lack of production. Simply printing more money without producing more goods and services will merely lead to inflation. To the extent that firms cannot meet the extra demand (i.e. the extra consumer expenditure) by extra production, they will respond by putting up their prices. Without extra production, consumers will end up unable to buy any more than previously...
Words: 89665 - Pages: 359
...Throughout the supply and demand simulation, it takes students through a city in Atlantis of two bedroom apartments which are in supply and demand. The simulation is used to teach about the concepts of the supply and demand curves. The concepts of supply and demand are important to understanding everyday world occurrences. When the demand curve is down, the quantity is increasing as the price is decreasing. When the supply curve is upward, the quantity increases as well as the price increases. The equilibrium is when the quantity demand is equal quantity supplied only at the equilibrium point. When the prices fall below the equilibrium, then there becomes a shortage within the market. While there is a shortage in the market, consumers are willing to purchase a product at any price and which increases the supplies in demand and quantity and there becomes a surplus in the market. The shift and supply curve can be determined by the equilibrium price and also by the decision making. The microeconomics is the supply and demand. The simulation shows the apartments going up and down in supply and demand in cost and in availability. When there are population changes within the city of Atlantis, this will factor in whether or not there will be a need for the apartments. The quantity of demand increases while the prices fall and everything else remains the same. While the supplies are decreasing the prices also fall and things will still remain the same. Working for...
Words: 539 - Pages: 3
