Create a new account

It's simple, and free.

Commodity Supply & Prices

Supply, in economics, is defined as the total quantity of a product that sellers are prepared to offer to consumers at different prices over a given period. Supply is described within the context of a supply curve, which is similar in concept to a demand curve. Where demand curves slope downward and to the right, supply curves slope upward and to the right. Over the longer-term, demand curves slope downward and to the right as the price on the Y Axis decreases and the quantity demanded on the X Axis increases. Within this context, demand is a function of price·the lower the price, the greater will be the demand until the market becomes saturated. Conversely, over the longer-term, supply curves slope upward and to the right as the price on the Y Axis increases and the quantity made available increases. Within this context, supply is a function of price·the higher the price, the more of the product sellers will place on the market until either the market is saturated or the sellers are no longer able to produce any greater quantities of the product.

Price reflects the equilibrium point (or intersection) of the demand and supply curves for a product. Price is defined as the quantity of money which must be exchanged for one unit of a good or service. A price system is a process of resource allocation in an economy. In a market economy, prices are determined in the market by the forces of supply and demand, without government intervention·for the most part.

A theoretical concept associated with the use of prices in a market economy is equilibrium. A market economy is said to be in equilibrium when the independently taken decisions of households and firms are compatible. To achieve this equilibrium, prices must be set at a level such that the total demand for any good is equal to the amount of that good that is initially available, plus the amount of it produced. Implicit in the concept of equilibrium is another theo...

Page 1 of 7 Next >

More on Commodity Supply & Prices...

Loading...
APA     MLA     Chicago
Commodity Supply & Prices. (1969, December 31). In LotsofEssays.com. Retrieved 02:00, March 19, 2024, from https://www.lotsofessays.com/viewpaper/1694649.html