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Supply and Demand is an economic model that describes how prices of commodities in an open competitive market naturally gravitate toward an equilibrium between the available supply for a commodity and the demand for that same commodity at any given time. In this model, supply is defined as the willingness of a producer to sell a commodity at a given price and terms, and demand is the willingness of a consumer to purchase that commodity at a given price and terms.

In principle, as supply increases, more of the commodity becomes available to consumers, and therefore the consumers have greater access to a wider range of sources of the commodity. In this circumstance, the commodity price falls. The commodity price can also fall when demand for that commodity weakens, forcing producers to "sweeten the deal" in order to attract buyers.

As supply decreases, price increases, because there is less of the commodity available on the market, and consumers must compete more aggressively with each other to purchase the same commodity. Price can also increase when demand increases, also creating increased competition for the commodity.

The supply and demand model seeks to identify and predict intersections between supply and demand curves, and thereby evaluate the current fair price for commodities, and to anticipate changes of the commodity prices.

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Related Questions

Define the term equilibrium Explain the changes in market equilibrium and effects to shifts in supply and demand?

madarchode machudda


Demand rises and supply is constant?

No. If demand rises, then supply falls. Transveresly, if demand falls, then supply rises.


What happens if there is not enough supply for the demand?

If there is not enough supply for the demand, the demand won´t be able to buy the supply


Law of demand and supply?

Consumers is the law of supply and demand.


Sentence with supply and demand?

Her supply of tight sweaters increases the demand for her as a date on the weekend.


What happens if there is more supply than demand?

When there is more supply than demand, there is commonly a drop in price of the product in an effort to increase the demand and achieve the equilibrium between supply and demand once again. Supply and demand are like a see-saw. As supply goes down, demand goes up; as demand goes up, supply goes down.


What happens if theres more demand than supply?

When there is more supply than demand, there is commonly a drop in price of the product in an effort to increase the demand and achieve the equilibrium between supply and demand once again. Supply and demand are like a see-saw. As supply goes down, demand goes up; as demand goes up, supply goes down.


Why demand curve slops downward from left to right?

The demand / supply graph is designed to have supply on the vertical axis (Y) and demand on the horizontal (X). Thus you will have a higher supply = lower demand, or lower supply = high demand.


Theory of demand supply?

The theory of supply and demand is that when supply are plentiful, they are typically more affordable and easier to find. When supply is low, demand and prices increase as a result.


What does an increase in supply of an item usually mean for a consumer?

lots of supply and low demand = lower prices lots of demand and low supply = higher prices demand and supply high = normal prices demand and supply low = normal prices


What happens if demand curve interacts with the supply curve?

Then demand and supply are equal.


Relationship between demand and supply?

1:inverse relationship between supply and demand 2:supply depends upon the demand of a commodity, that it might be positive or negative. 3:supply always depends upon demand but demand never depends to supply. 4:a supply never affects the demand of a commodity but demand always affect to its supply. 5:demand is the initial stage but supply is the stage after demand. 6:supply have a positive relations to price whereas demand has a negative relations with price. 7:supply and price has a direct relations or positive relation. 8:law of supply relates to the price and supply of a particular commodity in a particular time period. 9:price has a connections with demand and supply that it affects both supply in a positive way and demand in a negative way and if price changes then both demand and supply will change. 10:demand curve shows the changes positions of demand in a different price level of a particular commodity where demand schedule also shows the changes positions of demand in a different price level of a particular commodity, hence both have a common objectives to depict the same result in a different way.