Supply and Demand

People looking for jobs constitute the supply of labor. Firms looking for employees constitute the demand for labor. Clearly then if there is a large supply of labor available and not much demand, wages will be low. If there is a large demand for labor and a small supply, wages will be high.

For someone who's venturing into entrepreneurship, knowledge of the law of supply and demand would be of great help in decision making in terms of investing and allocating capital. An understanding on this principle also help to map out operational or strategic plans of a particular business.

The concept of supply and demand is one of the core foundations of economics (and is mostly applied in most of life's functions). In a nutshell, supply and demand is used for price determination in a market i.e. price will function to equalize the amount of something to be produced/serviced (supply) and the amount of something consumers intend to purchase.

A price ceiling prevents a price from rising above the ceiling. It represents an upper limit on the price of something. If wheat has a price ceiling of $400 per metric tonne, $400 is the highest amount any what supplier can charge. If the market price for wheat is below the ceiling, say $200 in this example, then the ceiling has no effect on prices; the ceiling is not binding. If the market price is higher than the ceiling, supply and demand cannot reach equilibrium and there is a shortage in the commodity. Artificially low prices result in demand that exceeds supply. The price, however, remains stuck at the ceiling.

1st way of government policy to affect demand/supply is through price ceilings and price floors. By price ceiling it means that goods have to be sold below this price and price floors means that goods have to be sold above this price set. When price is forced down, suppliers will supply less and consumers will demand for more causing shortage, vice versa, when price is high, supplier will provide more and consumer will demand less causing surplus.

1 such example is price floor on agricultural.

2nd way where government policy affect demand/supply is through enforcing or altering taxes, minimum wage rate, subsidies and so on.

Removing tax and increasing minimum wage rate increases disposable income of consumers which ultimately increase demand of good for normal goods and decrease demand of good for inferior goods. Hence, increasing tax and decreasing minimum wage rate will have the opposite effect.

Increasing subsidies for producers will reduce their cost of production which will increase the suppliers willingness and ability to produce goods and services.

-- By Johan Chua Song Yi

A trade off is a substitute of the oponent infraction which is equal to both area of a formula.

The answer is from an economics point of view. You might need to draw a diagram to understand the question better. Let's say that the initial equilibrium price and quantity is stable, where the demand and supply curves intersect each other. Using the market for console games for relevance, let's say the price of Play Station 3 is initially priced at USD 3.00. (it's only an example, as I have no idea how much it costs). At this price, we can say that that is the equilibrium price of the PS3, and the equilibrium quantity is 1000 units. However the equilibrium price and quantity can change depending on changes in the supply and demand in the market, hence the question is asking how the interaction between demand and supply can determine the price and output. Let assume that the demand for PS3 increases, which can happen in real life during holiday season or before Christmas. If this happens, in a graph, the demand graph will shift out. An increase in the demand while the supply remains the same, means there is excess demand of PS3 in the market. This means there are a lot of people who want to buy the PS3 but there are too little in the market or insufficient amount supplied. If this happens, the price will increase. (this is very normal in economics, when there exists excess demand the value of the good increases). The increase in the price, will thus form the new equilibrium price and quantity. We can say that the excess demand caused the price of PS3 to increase, and only a few can purchase it. This is one example of the interaction of demand and supply to determine the equilibrium price and quantity. At times, it's not only the demand that can affect the price and quantity. There are times where the supply can affect the price of a good. If excess demand causes the price to increase, excess supply, meaning a surplus of goods in the market. will mean the price will eventually fall. What you need to understand is the use of demand and supply to determine the price and quantity is a model. This demand and supply model is used to basicly understand the relationship between price and quantity and factors that can affect it.

The price will skyrocket, increase, go up.

The point where supply and demand intersect is the equilibrium point. This is the point where quantity demanded and quantity supplied are equal.

Graph

The price elasticity of supply (or demand) is the percentage change in supply/demand for a one-percentage change in price. Eg, if the price elasticity is 1, a 1% change in the price of a good causes a 1% drop in price. (Note that elasticity is given in absolute value, since it is usually negative.)

1. How do supply and demand affect choices?

the higher the price, the larger the quantity produced

is that price and supply tend to follow demand. is that price and supply tend to follow demand.

no

Well it means that equilibrium is basically a dynamic process and it adjusts to the new situation where basic variables of the market has registered changes and the new endowment point becomes the need of the situation.

yes.

You think probable to the variable price of metal ores; technically a "volatile metal ore" doesn't exist.

the supply has to go down and the demand rise

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