Supply, Demand & Price Elasticity

Supply for a good/product according to Sherman et al. (2008) "is the quantity of the good sellers would like to sell during a given period, at various prices"¦" Basically, the price of a good remains the main determinant of its supply. Given that the economy is deemed to be on the recovery mode, the disposable income of consumers could be on the increase as well. With a higher disposable income, consumers will be able to demand more of Anheuser-Busch's products at various prices hence triggering

Supply and demand lies in the heart and soul of economics. The concept is perhaps the single most driving force in an economy, specifically a capitalist economy. Supply and demand is based on two concepts: The law of demand and the law of supply. The law of demand states that the demand of a product rises as its price falls, therefore the demand of a product falls as its price rises. A good example of this occurs in grocery stores. If the price of a case of Coca-cola drops from $6.99 to $2.99 the demand for the product will rise because more people are willing to pay $2.99 rather than $6.99. Not only will typical consumer of Coca-cola purchase more but consumers who are not normally willing to pay $6.99 will make the purchase. Substitution also plays a role in the equation. Substitution occurs when consumers substitute one good for another based on price levels. In the Coca-cola scenario, some Pepsi drinkers will purchase the Coca-cola given the case of Pepsi is price higher.

Supply and demand is a fundamental element of economics; it is the main support system of a market economy. Demand can be interpreted by the quantity of a product or service a consumer is desired to acquire at a given time period. Quantity demanded is the amount of product consumers are willing to purchase at a given price; the relationship between price and quantity demanded is commonly known as the demand relationship. Supply however, accounts for how much a market produces for consumers. The quantity supplied refers to the actual amount of a certain good firms are willing to supply to consumers when receiving a certain price. Having limited resources we all have to

The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the

Elasticity : rising or falling price lead changes in quantity of demand, and the quantity of supply and this so-called elasticity

Rise in price will see a greater quantity supplied (quantity will rise), shift in supply curve. (McTaggart, 2010), (Layton, 2009).

Supply and demand regulate the amount of each good produced and the price at which it is sold. It is the conduct of individuals as they work together with one another in aggressive markets. “A market is a group of buyers and sellers of a particular good or service. The buyers, as a group, determine the demand for the product, and the sellers, as a group,

In addition to the law of demand, the law of supply also serves as the second major resource in studying economics. The law of supply states that with other factors remaining constant, as the price rises, the quantity of the product supplied also rises. Conversely, as the price falls, quantity of the product supplied also falls (Colander, 2006, p 97). The law of supply is refers to how producers can effectively substitute the production of one product for another (Colander, 2006, p.

Based on the above description, forms of elasticity will affect business decisions and pricing strategies differently depending on the nature and type of products or services being offered. Business organizations whose product offerings have elastic and perfectly elastic price elasticities of demand should not attempt to raise prices of their products because it will cause the quantity demanded and consequently total revenues to drop drastically. Businesses can there use the price elasticities of demand to determine whether the proposed changes in their prices will raise or reduce their total revenue. The following expression may be useful in helping business organizations to determine the impacts of elasticities on their total revenues based on the suggested price changes.

Every day people use products without thinking about the significance of that particular product. Many people do not realize how important these products are and how much one product that is used every day affects the economic status of not only the country but the world. Wheat is used to make a large number of products which include beer and bread. The next few pages of this report will discuss how supply and demand for wheat shifts, how it affects price, and whether or not wheat is a luxury or a necessity will also be analyzed.

Markets consist of individual or groups of businesses that are prepared to supply a product, and customers who demand the product. Market price is determined by the interaction of the forces of demand and supply.

Demand is the relationship between price and quantity demanded for a particular good and service in particular circumstances. For each price the demand relationship tells the quantity the buyers want to buy at that corresponding price. The quantity the buyers want to buy at a particular price is called the Quantity Demanded.

Changes in supply can occur for a number of reasons. Government policies can cause changes in supply. The supply of health food can be directly affected by government policy changes. Currently, there are subsidies for certain crops grown in the United States. If a change in policy caused these subsidies to be tied to organic crops, then the supply of organic products would increase. Technology can also increase the supply of health foods. There are all sorts of additional colors and preservatives added to food to increase presentation and shelf life. If one developed a technological advance that illuminated the need for these additions, the supply of healthier foods to the markets would increase as well. Ultimately, in order the change the supply for a product, one must change the amount incoming resources, the size of the labor force, or anything else that allows an organization to produce more of a certain product. Changes in supply or demand can result in a change in the quantity demanded.

Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.

Supply refers to the quantity that the suppliers wants to sell at certain price at particular time. Like: Demand, Supply is also the function of price. Supply is expressed as S=f(p). The supply is directly proportional to the price, the supply of quantity of product increases with the increase in the price of the product.