Supply and demand

related topics
{rate, high, increase}
{company, market, business}
{theory, work, human}
{@card@, make, design}
{math, energy, light}
{math, number, function}
{car, race, vehicle}
{food, make, wine}
{style, bgcolor, rowspan}

Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity.

The four basic laws of supply and demand are [1]

Contents

The graphical representation of supply and demand

The supply-demand model is a partial equilibrium model representing the determination of the price of a particular good and the quantity of that good which is traded. Although it is normal to regard the quantity demanded and the quantity supplied as functions of the price of the good, the standard graphical representation, usually attributed to Alfred Marshall, has price on the vertical axis and quantity on the horizontal axis, the opposite of the standard convention for the representation of a mathematical function.

Determinants of supply and demand other than the price of the good in question, such as consumers' income, input prices and so on, are not explicitly represented in the supply-demand diagram. Changes in the values of these variables are represented by shifts in the supply and demand curves. By contrast, responses to changes in the price of the good are represented as movements along unchanged supply and demand curves.

Full article ▸

related documents
Phillips curve
Inflation
Minimum wage
Keynesian economics
Intelligence quotient
401(k)
Labor theory of value
Flat tax
Neoliberalism
Medicare (United States)
Unemployment
Elo rating system
Poverty
Pension
Purchasing power parity
Poker probability
Variance
General equilibrium
Land value tax
Economic growth
Interest
The Bell Curve
Full employment
Sixteenth Amendment to the United States Constitution
Deflation
Externality
SAT
New Keynesian economics
Carbon tax
Statistical hypothesis testing