Factors That Affect Demand and Supply
Demand and supply in economics, is a description of the relationships in the market, between potential buyers and sellers of an item. Demand is the number of items purchased or requested at a certain price and time. While the offer is a number of goods sold or offered at a certain price and time
The supply and demand model is used to determine the price and quantity sold in the market. This model is very important for conducting microeconomic analysis of the behavior of buyers and sellers, as well as their interactions in the market. It is also used as a starting point for various economic models and theories. This model estimates that in a competitive market, price will function as a counterweight between the quantity demanded by consumers and the quantity offered by producers, so that an economic balance is created between price and quantity. This model accommodates the possibility of factors that can change the balance, which will then be displayed in the form of a shift from demand or supply (Hardynin in Sri Lanka Journals Research).
Law of Demand and Supply. If all assumptions are ignored (ceteris paribus): If prices get cheaper then demand or buyers will increase and vice versa. If the price is lower / cheaper, the offer will be less and vice versa.
All happened because all wanted to find satisfaction (profit) as much as possible from the existing price. If the price is too high then the buyer might buy a little because the money he has is limited, but for the seller with a high price he will try to multiply the goods sold or produced so that the profits obtained are even greater. High prices can also cause consumers / buyers to look for other products as a substitute for expensive goods.
Law of demand. The law of demand is the law that explains the existence of a negative relationship between the price level and the quantity of goods demanded. If the price rises the amount of goods demanded slightly and if the price is low the quantity of goods demanded increases. Thus the law of the request reads:
“The lower the price level, the more the amount of goods available is requested, and conversely the more the price level rises the less the number of goods that are willing to be requested.” In the law of demand applies the ceteris paribus assumption. This means that the law of demand applies if the circumstances or factors other than the price do not change (are considered fixed).
Bidding law. That the higher the price, the more goods offered. Conversely the lower the price of the goods, the fewer items offered. This is called the law of supply. The law of supply shows the relationship between the amount of goods offered and the price level. Thus the sound of the bidding law reads:
“The higher the price, the more number of items that are willing to be offered. Conversely, the lower the price level, the less amount of goods that are willing to be offered. “The law of supply will apply if other factors that influence the supply do not change (ceteris paribus).
Demand and Supply have things that influence the occurrence and continuation of demand and demand, those that we will discuss are the Factors Affecting Demand and Supply. before discussing this let us know the demand and supply. Demand is the amount of certain goods or services demanded by consumers at certain price levels and in certain situations. Offer is the amount of goods or services to be sold (offered) at a certain price level and situation. Factors That Affect Demand and Supply include:
1. Factors that Affect Demand
Taste. with changing consumer tastes for a particular product or service, of course the number of requests for that product or service changes. If the goods or services are being liked a lot, then the demand for the goods or services will increase. The opposite situation will occur if the goods or services are not liked by consumers.
Revenue Change. If the people’s income increases, there will certainly be a change in demand patterns in the market. For example, salary increases for civil servants and private employees will certainly increase the income of civil servants and employees concerned. This increase can result in changes in demand for some commodities at certain price levels for basic necessities, education and recreation, and many more
Change in Population. Population growth is a very dominant factor in changing demand and supply. This phenomenon is easy to understand, considering that it is not possible for a human child born in this world to be left alone without care, food, clothing and shelter and education as befits a human being who has to live a normal life. So explain that the increasing number of residents will result in increased demand for goods or services
Expectations or Expectations. Consumer expectations or expectations are estimates that he sets later on the income he receives. If he estimates that his income level will increase, so the number of requests will tend to increase. Conversely, if he estimates that his income level will decrease, then the number of requests will tend to decrease.
Prices of other related goods, both substitute goods and complementary goods. With the increase in the price of substitute goods, the demand for a particular item will increase, and vice versa if the substitute item decreases, the demand for that item decreases.
2. Factors That Affect the Bid
Production Technology. The level of technological progress of the company determines the company’s production capability. In general, the higher the technology applied, the more efficient the company is. The emergence of new producers. The emergence of new producers in the market will increase the number of goods sold and offered. Prices of Production Sources. Rising prices of production sources will lead to ups and downs in production costs. This will affect the offer of a type of goods.
Manufacturer expectations or expectations. If producers estimate an increase in the price of goods or services, a decrease in the prices of production sources, also an increase in consumer income, then from the producer will further increase the amount of supply to consumers. Thus a simple article about the discussion of Factors Affecting Demand and Supply. I hope this article is helpful for all of us. That is all and thank you.
Factors That Affect Demand and Supply