The Determining Factors of Supply and Demand in a Market
Economics is the study of the production and distribution of wealth
and how resources are distributed for the production of goods and
services within a social system. Economics provides the language,
principles and a way of thinking to help people unravel why they have
to make choices. (www.google.co.uk)
Throughout this assignment I am going to discuss the main factors that
determine the quantities supplied and demanded in the UKmarket for
shoes.
"Supply is the amount of goods available at a given price at any time.
Demand is how many consumers desire the goods that are in supply."
When there are many people in the market, no one person or firm has
any real control over the market price or the total quantity sold.
Consumers are all unique, but they do share some common attributes.
They do be inclined to react to market circumstances in similar ways.
The demand relationship identifies the similarities across buyers.
The amount of people demanding shoes can radically increase or
decrease each week in relation to both internal and external factors
of the market. The demand curve can be defined as the "graphical
representation of the relationship between the demand for a good and
its price, drawn on the assumption that everything else affecting
demand remains unchanged.
One major factor that affects the demand for shoes in the UK is price.
UK consumers are extremely price conscious and value driven. If prices
in shoes rise then the demand for them will decrease. Although if
shoes are brought onto the market at good value for money then the
demand for those shoes ...
... middle of paper ...
...eduction in quantity supplied at every price and therefore
shifts the supply curve to the left.
Changes in unit labor costs or capital costs can affect supply.
Materials such as leather are needed to produce shoes. If the cost of
leather was to decrease then the quantity of shoes would increase,
shifting the supply curve to the right as shown below.
In conclusion you should normally assume that higher prices are
associated with a smaller quantity demanded. Quantity demanded at each
price will change when any number of outside factors changes. Changes
in income, other prices, and basic preferences will cause the original
demand numbers to either increase or decrease. The interaction of
supply and demand determines the market price and the quantity sold in
the market. The market price is called the equilibrium price.
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When the price of raw material will go up or down, the production coats will rise or fall. Secondly, the price of substitute products also affect the supply curve. Because the relatived products are competitive relationship, when the price of one product goes up, another will goes down. It will affect suppy. Thirdly, production technology will affect the supply curve. When the level of technology is rising or falling , the production costs will go down or up. finally, the government policies will affect the supply curve. Positive policies will make the supply go up, conversely, it will go down. For example, the govenrment limit the amount of cars which people can buy, it will caused the supply curve down. In addition, the price of product in the future and the development of product company will also affect the supply