How does the interaction of the demand for and supply of a commodity determine the market price of the commodity and the equilibrium quantity of the quantity of the commodity that is produced and consumed?
2007-07-04 11:54:14 · 4 answers · asked by sis79 2 in Social Science ➔ Economics
PH is correct ... we're not in a "Free Market" with "Price Fixing", "copy-rights" laws, and socialist government programs like education & social security. The correct economic modle to study is "Socialism" where "Class" is the focus instead of a fluctuating market price.
However, Supply & Demand still exist in "Cartel" models. The equalibrium usually is much higher than the natural supply and demand since they can manipulate the price.
In a perfect free market we start off imagining "Unlimited Supply" and "Zero Demand". With this case, the supplier would be out of business. Once people start to use the product, the demand goes up. The more people want the good or service, the higher the price. However, the supplier can produce more to give the purchaser (demand) more and this lowers the price.
2007-07-04 12:16:11 · answer #1 · answered by Giggly Giraffe 7 · 1⤊ 0⤋
I don't believe in supply-demand analysis, because markets are manipulated, people are manipulated, supply is manipulated, and demand is manipulated.
If theory does not resemble real life, then the theory is wrong.
When advertisors, governments, CEOs, lawyers, and politicians stop screwing with us all, maybe you can go back to econ 101 and get useful information from thoes pretty sloped lines and intersections.
2007-07-04 12:04:40 · answer #2 · answered by PH 5 · 1⤊ 0⤋
Oppositely.
2007-07-04 12:22:08 · answer #3 · answered by Happy Camper 5 · 0⤊ 0⤋
For every buyer there is a seller....., and vice versa.
2007-07-04 14:50:14 · answer #4 · answered by Lawrence E 4 · 0⤊ 0⤋