Market Supply & Demand Essay

Submitted By Daquan-Love
Words: 1271
Pages: 6

Market Supply is the amount that every seller is willing and able to sell a good. Market Supply combines individual supplies of firms or a producer willing and able to sell a particular good. As the market price rises, producers will expand their supply onto the market. This equation Quality +service + value = satisfaction, is explained as market supply. The term “market supply” is a synonym of “supply”. The term “market” is added to “supply”, so it focuses its attention on the combined supply of all sellers in the market. Supply could be referred to as individual supply, market supply or other supplies. Adding “market” to “supply” sets it apart from the other suppliers, which includes aggregate supply, which is the total production of goods and services in the macro economy: factor supply, which is the supply of the services of the factors of production; and money supply, which is the total amount of circulating around the economy. Buyers and sellers make up a market, which they engage in “exchange”. Exchange is a voluntary trading goods of value to people. The buyer exchanges money for the good or service, while the seller exchanges the good or service for money.
Sellers are on the supply side, while buyers fall under demand side. Demand shows quantity buyers buying at different prices. A demand relationship can be expressed as a table, chart, or a graph showing prices and corresponding quantities demanded. The idea of price many be expanded depending on the time, travel, inconvenience, discomfort or whatever the buyer may have to give up to acquire the product or service. Supply shows the quantity of sellers willing to set at various prices. Supply relationship can be shown as a table, chart, or graph showing prices and corresponding quantities supplied.

If market demand is stable, an increase in market supply and a decrease in price.

If market supply is stable, an increase in market supply and an increase in price.

The supply curve shows a relationship between the prices of a good or service, and the quality a producer is willing and able to sell in market. Market supply curve is found horizontally adding all individual supply curves that sums up the quantities supplied by all sellers at each and every place. The upward- sloping market supply curve is caused by the market supply captures the selling side of a market exchange. Guided by the law of supply, sellers are able and willing to sell a large amount of quantity at a higher price.
The first cause of the supply curve is cost of production. The decrease in cost of production leads to the increase in the supply of a good because the supply curve shifts downward and to the right. Lower cost shows that the business will supply more at a higher cost. If production increases, a business will not be able to supply at same price, which will cause an inward shift of supply curve. The second cause of supply curve is changes in production technology. Technology changes quickly and in industries expects technology to change quickly, which expects an increase in supply. The third cause of the supply curve is government taxes and subsidies. The involvement of the government has a huge affect on supply which tax producers cause an increase in cost and will causes supply curve to shift upwards. Subsidiary affect is opposite of tax cut. Subsidy will increase supply due to a payment from the government, which reduces a firm’s cost allowing them to produce more output at any given price. Supply curve shifts downward and to the right depending on the size of the subsidy. The fourth cause of the supply cause is climactic conditions. Foods, milk, and wheat the climate can exert a huge influence of supply. Good weather conditions can produce a harvest and will increase supply. Bad weather conditions will affect the market prices for many agricultural goods. The fifth cause of the supply curve is change in the price of substitute. A substitute in production of a