Difference between revisions of "Introduction to entrepreneurship/IENT103/Economics/Supply"

Revision as of 23:54, 3 January 2019 (view source) Cgoode (Talk | contribs) (Amending resource (cannot find chapter on lumen learning)) ← Older edit		Revision as of 00:12, 4 January 2019 (view source) Cgoode (Talk | contribs) (Adding feedback in quiz) Newer edit →
Line 29:		Line 29:
	* If supply decreases, prices will		* If supply decreases, prices will
	** decrease		** decrease
−	*** '''Incorrect'''. Think about the courgette example above.	+	*** '''Try again'''. Think about the courgette example above.
	** stay the same		** stay the same
	*** '''Incorrect'''. Think about the courgette example above.		*** '''Incorrect'''. Think about the courgette example above.
	** increase		** increase
−	*** '''Correct'''.	+	*** '''That's right'''.
	* Price decreases result in		* Price decreases result in
	** consumers buying less of the good.		** consumers buying less of the good.
	*** '''Incorrect'''. Think about why shops have sales.		*** '''Incorrect'''. Think about why shops have sales.
	** consumers buying more of the good.		** consumers buying more of the good.
−	*** '''Correct'''.	+	*** '''Yes, correct'''.
	** no change in consumer buying.		** no change in consumer buying.
−	*** '''Incorrect'''. Think about why shops have sales.	+	*** '''Try again'''. Think about why shops have sales.
	* Equilibrium price is where the quantity of a good demanded by buyers equals the quantity producers are willing to supply.		* Equilibrium price is where the quantity of a good demanded by buyers equals the quantity producers are willing to supply.
	** True		** True
−	*** ''''Correct'''.	+	*** ''''That's right'''.
	** False		** False
−	*** '''Incorrect'''.	+	*** '''Think about the meaning of the word 'equilibrium' in other contexts. Does that help?'''.
	}}		}}

---

Revision as of 00:12, 4 January 2019

The 'Law of Supply and Demand', or simply Supply and Demand is a world-recognised economic model which determines the price any item will sell at.

To understand the model, we should first think about 'Supply', and then consider 'Demand'; before putting the two concepts together.

In simple terms:

• Supply is the amount of something that providers are willing to bring to the market (i.e. supply) at a given price.
• Demand is the amount of something that consumers want to buy (or demand) at a given price. ^[1]

So what is Supply and Demand? This is an economic model where the price at which a good (a product or service) is sold is controlled by the good’s level of supply, and its demand. If the supply of a good is equal to its demand, there is an economic equilibrium, and the good is sold at a stable price which buyers and sellers are happy with.

However, Supply and Demand can (and often does) fluctuate. When the supply of a good is greater than the demand for that good, there is a surplus. On the other hand, when demand for a good is greater than the supply, then there is a shortage. In January 2017, for instance, there was a shortage of courgettes in the UK due to bad weather across Europe ^[2]. This resulted in either no supply available to many supermarkets or, where supply was possible, the price rose from £6 or £7 per box to £20 per box. In another example, there is a housing shortage in New Zealand (so demand is greater than supply), and this is forcing the house prices to jump to record highs ^[3]. Can you think of any examples of shortages or surpluses in your region?

References

1. ↑ What Is ‘Supply and Demand’ in Business?
2. ↑ The Guardian
3. ↑ OneRoof