As necessity is the mother of invention, so is the demand the creation of supply.
Law of Demand and its determinants
Demand is the willingness and ability of consumers to purchase goods and services at various prices during a period of time. Quantity demanded is the amount that will be purchased at a specific price during a period of time.
The law of demand holds that, if all other factors are held constant, the price of a product and the quantity demanded are inversely related.
The determinants of demand are factors other than price that affect the number of goods and services consumers purchase. Examples are consumer incomes, consumer tastes and preferences, prices of related goods, consumer expectations, and the number of consumers.
Have you analyzed the demand of the product and services you are offering with context to the dynamic determinants of demand?
Law of Supply and its determinants
Supply is the number of goods and services that producers are willing and able to offer to the market at various prices during a specified period of time.
The law of supply holds that, if all other factors are held constant, the price of the product and the quantity supplied are directly (positively) related. The higher the price of the good, the greater the quantity supplied.
The determinants of supply are factors other than price that affect the amount of a commodity that producers offer. Examples are the cost of inputs, the efficiency of the production process, expectations about price changes, and taxes and subsidies.
Have you analysed your product offers and the impact of various determinants of supply?
Market demand is the sum of the individual demand curve of all buyers. The market supply is the sum of the individual supply curve of all sellers.
The combination of the price and quantity at which the market demand and supply curves intersect is market equilibrium.
Elasticity
Price elasticity of demand measures the sensitivity of the quantity demanded of a product to a change in its price. It equals the percentage change in quantity demanded divided by the percentage change in price.
When the demand elasticity coefficient is greater than one, demand is in a relatively elastic range, a small change in price results in a large change in quantity demanded.
When the demand elasticity coefficient is less than one, demand is in a relatively inelastic range, a large change in price results in a small change in the quantity demanded.
Have you branded your product /services, so the demand for them is in a relatively inelastic range?
Price elasticity of supply measures the sensitivity of the quantity supplied of a product to a change in its price.
When the supply elasticity coefficient is greater than one, supply is in a relatively elastic range, a small change in price results in a large change in quantity supplied.
When the demand elasticity coefficient is less than one, supply is in a relatively inelastic range, a large change in price results in a small change in the quantity supplied.
If the supply/demand elasticity coefficient is zero, then supply/demand is perfectly inelastic (vertical line). If it is infinite, then supply/demand is perfectly elastic (horizontal line)
Market Structures
Market structures dominate the demand, supply, pricing, etc. The four basic structures are pure competition, pure monopoly, monopolistic competition, and oligopoly. For all market structures, a firm that does not shut down should produce the level of output at which marginal revenue equals marginal cost.
Have you analyzed the market structure in which you operate? You may have accordingly price, and produce to thrive and survive.
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