Characteristics Of Supply And Demand

Characteristics of Supply and Demand The law of supply describes the practical interaction between the price of a commodity and the quantity offered by products for sale. The law of supply is a hypothesis, which claims that at higher prices the willingness of sellers to make a product available for sale is more while other things being equal. When the product is high, more producers are interested in producing the products. On the contrary, if the price of a product is low, producers are less interested in producing the product and hence the offer for sale is low. The concept of law of supply can be explained with the help of a supply schedule and a supply curve. (Econperspectives). In most cases, the supply curve is down as a slope rising upward from left to right, since product price and quantity supplied are directly related. This relationship is dependent on certain ceteris paribus conditions remaining constant. Such conditions include the number of sellers in the market, the state of technology, the level of production costs, the seller’s price expectations, and the prices of related products. A change in any of these conditions will cause a shift in the supply curve. A shifting of the curve to the left corresponds in the quantity of product supplied, where as a shift to the right reflects an increase. (Econperspectives). The market supply curve is derived by summing the quantity suppliers are willing to produce when the product can be sold for a given price. As a result, it depicts the price to quantity combinations available to consumers of the good or service. In combination with market demand, the market supply curve is requisite for determining the market equilibrium price and quantity. (Econperspectives). Determinant is how badly the consumer wants the good- whether it sacrifices a basic need, and whether there are substitutes. Toothpaste in general would be most inelastic, since you got to brush your teeth. Crest, being one of the many brands, will

References: (2008). Why do supply curves slope upward. . Retrieved from econperspectives.blogspot.com (2011). Elasticity of supply and demand. . Retrieved from www.basic economics.info McConnell, B. (20 e). Macroeconomics.