Factors Affecting Demand and Supply Essay
Factors Affecting Demand and Supply
Apart from price, there are many factors that affect demand and supply of goods and services in the market (Handerson, 31). Demand is the quantity of goods and services that a consumer is willing to purchase for his or her own consumption. While supply is the quantity of goods and services a seller is willing and able to supply for sell to the market (BasicEconomics. info). In every market environment, demand and supply are so intertwined and also related in a way that, demand is for consumers and supply is for suppliers.
There are specific factors that affect demand, and others affecting supply of goods and services in the market. The main factor that motivates demand is the choices that consumers make in their purchases. And to the suppliers, the cost of production guides their supply (BasicEconomics. info). Demand can be determined by a number of factors. Apart from the price of commodities existing in the market, demand is dependent on the income of a consumer. When the income of a consumer is much, the consumer will demand more of his daily consumption, and this will push the demand curve to the right.
The demand for other substitutes also determines the level of demand of some goods and services (Handerson, 32). For instance if an individual always consumes meat every day, and meat happens to be expensive, shall the consumer be rational enough, he will chose to take vegetables as a substitute. This will make the demand for vegetables to rise as compared to that of meat. The demand curve of vegetables will move to the right outwards (Handerson, 33). On the other case of supply, the cost of raw materials used to produce the product will affect the supply of a good in the market.
If the cost of a production of a good is so expensive, then its supply to the market will be low. Competition also affects the supply of a product into the market. If many producers are producing the product, then supply will be so great into the market. In conclusion, demand and supply of a commodity are so much determined by many factors. Technology affects supply and demand at the same time. As technology advances most individuals demand more goods and services in the market. Future expectations of price change of some goods and services in the market also affect demand of consumers.
Further still, personal tastes and differences also affect the demand of a good or service. The basic idea is that demand per se affects supply. With high demand of goods and services, supply will also increase. Every time demand increases, the demand curve shifts to the right, and when it decreases, it shifts to the left, and so is supply curve. Works Cited BasicEconomics. info. Supply and demand. BasicEconomics. 2007-2010. Web July 16, 2010 from: http://www. basiceconomics. info/supply-and-demand. php Henderson, Hubert D. Demand and Supply. Charleston, South Carolina: Bibliobazaar, LLC, 2008