Factors Affecting Demand And Supply Of Products In The Market Case Study

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Demand and supply are tools used in the market to control the quantity produced by the manufacturer and the price of the product in the market. Economic forces try to stabilize the market through maintaining equilibrium. Various factors affect demand and supply of products in the market. They include price of the product, cost of production, natural condition, technology, transport conditions, the price of related goods, and government policies. The essay focuses on the major factors that affect the demand and supply of goods and services in the economy.
Essay Background
Economic growth and development depends on the revenue a nation is making per annum. Therefore, factors affecting the market operations are considered to control the economy. The following are major determiners of demand and supply in the market.
When the price of a product is high, the producers are motivated to produce more products because the revenue is determined by both the price and quantity sold. A high price in the market attracts a high level of supply. The large supply of the products affects the market greatly. The large production increases flooding aspect of the products in the market. Therefore, available products create a large pool of choice for the buyer (Deltas, 2008).
Over time, the price starts falling because of flooding of the market. In the long-run, few producers are left in the market because of poor sales. Market forces that control the equilibrium of the market also control changes in supply and demand. Equilibrium is a focal point where the quantity supplied equals the quantity demanded. The surplus in quantity demanded or supplied creates a gap in the market, thus, making the forces of the market work on shifting the market into an equilibrium

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