Different circumstances affect supply and demand.
For instance, the price of lobster rises, therefore a seafood restaurant that sales lobster would raise the price of the lobster that causes the demand of the lobster to decrease this is price of input. If the lobster production increases causing more lobsters availability the market price of the lobster decreases this creates a good technological change.
When a seafood restaurant changes the menu by adding a variety of plates that do not include lobster when the lobster price high the restaurant focuses on selling the other plates available this is known as prices of substitutes in production.
Another way change affects supply and demand is by the number of firms or business in the market if a new business or firm opens then there is more competition and prices may vary depending on the supply in demand.
When a firm or business anticipates that the prices of the goods or service will increase from what the price is today that allows the business or firm to increase the current price this also causes change to affect supply and demand. Market equilibrium is a balance of supply and demand. The changes in prices and quantity affect the equilibrium in positive and negative ways. We explain this concept using the various forms of reading material as an example. The forms of reading material the individuals will use include books, online reading material, and the newer e-readers.
The main form of reading material used to be physical books. The development of the Internet vastly increased the amount of free reading material available to consumers. The typical reaction of this event should have caused the prices of reading material to drop. The decrease in quantity demanded of books should have caused the price of them to drop. The loss of consumers was a negative cost for suppliers. The market reacted to the lost of demand by shifting the form of books. The suppliers shifted the equilibrium back to a more self beneficial market in several ways.
We will base this on one consumer’s personal observations. The first way suppliers used was to print hard back book at higher prices and not print the cheaper paperback form until at least nine months later. They also made the price of new online reading material the same prices as a new book. The suppliers also decreased the quantity supplied of hard back books causing an increase in demand. Market equilibrium is a constant balance of what consumers want and what suppliers deliver.
Cite this Changes in Supply and Demand
Changes in Supply and Demand. (2018, May 05). Retrieved from https://graduateway.com/changes-in-supply-and-demand-essay/