By creating a balance between buyers who want low prices and sellers who want high prices
-APEX
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The goverment
The price of a given commodity will determine both the demand and the availability of goods. If the price is reduced the demand of the goods will increase and the availability of the goods will reduce.
The three characteristics of a supply curve are the slope, shift, and the curve's position. Together they help determine supply and demand trends.
its easy, when supply is increased, the price decreases. A decrease in price leads to an increase in demand. So technically supply creates its own demand. Supply function is not what is available for supply, it is clearly defined as "what is the quantity of goods that suppliers are willing to supply at each price". So even if a supplier has ample stock it does not mean it is the supply of that product . Technically supply is fixed by the producer or supplier who fixes it through their willingness. Thus supply is directly proportional to price. If price increases supply increases and vice versa. The logic behind this is if price goes up "having the cost of production at the same level" the profit margin increases. thus to earn more profit more quantity is supplied at high price and vice versa. Thus generally speaking supply cannot create its own demand unless the good is a perishable one which the supplier cannot have more shelf life and it has to come to market causing the price to decrease effecting in high demand.
Elasticity of demand will help managers determine what behaviors affect customer's buying behavior. Price elasticity will tell managers whether they can change the price of products or not.
-determine the nature of the commodity -it can be applied in the intersection of marked demand and supply of commodities -help firms to respond to changing economic situations.
Law of demand is the higher the price, the less quantity is demanded. Price is on y (verticle axis) and quantity is on x axis (horizontal axis). Supply curve (curve in this case is a straight line) starts from origin, increases on a 45deg angle, Demand curve starts from high price/low quantity to low price, high quantity. Draw a table with demand column and price column, and a price increases, demand decreases.
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Supply and demand
Price mechanism is a term referring to how the change in the prices of commodities affects demand and supply. It is important because it regulates the price in the market, absence of price mechanism may lead to an increase in price once demand gets high.
The main benefit of commodity future trading is that it will help balance out supply and demand. It will also add a little competition to the markets which will in turn help the consumers get a better price for goods.
As a consumer, the law of supply and demand affects our everyday life. The food we eat are subject to the same law, that at higher prices, producers are willing to offer more products for sale than at lower prices. We can only substitute the brand or prefer the lower price if there is no change in quality.
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