SUPPLY & DEMAND

Supply & Demand.

Firstly, I would like to use this graph to start off this blog entry.

Based on this graph, we can notice a few things. First, supply goes proportional to the price, as price increase/decrease supply follows. Second, demand goes inversely proportional to price, as price increases demand decreases and vice versa.

The Law of Demand

As the price of an item decreases, the demand of quantity will increase and as the price of the item increases, the demand of that quantity will decrease. That is why we see it down-sloping from left to right.

The Law of Supply

The quantity of supply varies directly with price. The amount of the product increases as the price of it increases. That is why we can see an up-sloping graph.

Demand is low when supply is high. Supply is low when demand gets high. Where there is less of the product which consumers want, they will be willing to pay for that product at a higher price. Once there is a lot of that product available then consumers would not want to pay for the product at the same price but rather lower so selling that product at a lower price to extinguish the extra quantity to be used as space for other products.

To set the right price, it would be where the two lines meet.