The term demand used to refer to the quantity of services or product that is of desire to the buyers at a specified period. People or buyers are always willing to buy these products at a given price that is imposed by the seller. The relationship established between the quantities demanded, and their respective prices are called demand relationship. Supply in turn means the quantity of products that the market can avail to buyers at a precise period. The two terms are usually used to express the two primary forces in our markets (Williams " Khim, 2018). The concept of demand and supply brings out the equilibrium price for a particular product.
However, there is need to construct a graph showing the trending rise and fall of prices in connection with the quantity of products and services demanded or supplied to the market. A case study in San Francisco. Under this paper, Information gathered on supply and demand for electronic dog feeders is used to establish the relationship between the two parameters and address resulting questions from graphical constructions. The data to be used in constructing the supply-demand curves is shown below.
Price
300
270
240
210
180
150
120
80
60
30
10
Qs
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
Qd
500
600
700
800
1000
1100
1200
1300
1400
1500
1600
To construct a demand and supply graphs, axis labeling is kept into consideration. The price values fall under the X-axis by default while demand and supply values fall under the Y-axis but as polynomial functions. In this case, these values are not linear functions hence the resulting figure becomes the supply and demand curve. For instance, the curves can either be used to show supply curves for individual consumers or a particular firm. In economics, the curves are used to show cumulative demand and supply of multiple consumers and firms. From the data given from the electronic dog feeders, the resulting curves are shown below.
Question 2
From the graph above, Demand is high at low supply, which consequently makes prices of same products higher. On centrally, when the demand for products is low, the supply becomes higher hence resulting in a reduction of prices of the commodities or services in the market structure.
The law of demand and supply is perceived to be a theory that explains the interaction established between demands for resources available in the market and the supply of the same resources to available consumers. The theory explains the consequences of desires, availability of certain products and the effects this brings to the prices of the same products. In general, High demands and low supply increase prices and in contrast, lower demands and higher supply tends to make prices fall as demonstrated with the graph.
Question 3
At the equilibrium, the quantity of products or services is equal at the same price. From the market illustrated above, the equilibrium price is $ 120, which in turn makes the quantity demanded and supplied, be 1200. These parameters create the point of equilibrium where the two curves intersect.
Question 4
If the government imposes a constant price of $ 180 on the feeders, the demand of the feeders will be higher consequently reducing the quantity supplied. The supply-demand law can explain this; increased price will reduce the supply of the products and increase demand for the same products.
Question 5
If the price is imposed on $90, there will be low demand and higher supply of the electronic dog feeders. It will consequently shift the supply curve to the right as demand curve shifts to the left.
Question 6
If the price of the feeders is dropped by 50%, it implies that half reduce the equilibrium price. Consequently, it will reduce prices of each supply-demand curves points by half. The resulting curves will have a new equilibrium point.
The new equilibrium price will be at $ 60 as shown below. It implies that the Equilibrium price has shifted to the left due to the price decrease by 50%. New prices are labeled at X-axis, and the quantity supplied and demanded at the Y- axes.
Question 7
Income is one of the factors that affect the demand and supply curves as well as the equilibrium prices. If consumer’s income is raised, it means feeders will be affordable to many making their demand go high. An increase in demand consequently reduces the supply of the feeders to the market. Because of this, the equilibrium price is likely to rise as shown below.
Question 8
A decrease in the number of sellers implies a decrease in the quantity of supplied feeders to the market. An increase in demand is likely to be experienced, which in turn increases the equilibrium price and the feeders’ prices in general.
Question 9
The normal and inferior good are terms used in economics. By definition, normal goods are those whose demand rises because of increase in income levels of individuals in a given society. On the other hand, an inferior good is that which its demand declines when income rises. Example of inferior goods can be off-brand electronics, generic goods, and discount store clothing.
The electronic dog feeders are normal goods because their demand rose because of income increase. From the curves in question seven, an increase in demand curve increases the equilibrium price caused by the inclining of income.
Reference
Williams " Khim C. (2018). Supply and Demand | Brilliant Math " Science Wiki. Retrieved February 19, 2018, from https://brilliant.org/wiki/supply-and-demand/
