supply and demand

Angebot und Nachfrage sind zwei wichtige Begriffe der Market economy. Kurz erklärt bedeuten sie: Auf dem Markt wird nur so viel angeboten, wie von den Verbrauchern verlangt wird.

Prices influence supply and demand

The price of the respective product plays a major role and influences the balance between supply and demand. It can be concluded from this that the lower the price of a good, the higher the number of buyers. Conversely, this means that the number of buyers will decrease if the price of the good on offer increases.

Supply and Demand (Economics)

So-called luxury goods are excluded from the balance between supply and demand. With them, demand often rises as the price rises. The reason for this is that the respective luxury good is given an increased reputation due to the price increase.

This ultimately results in a price change when buyer demand changes. This change is called price elasticity in technical jargon (see elasticity). The price elasticity is calculated by dividing the percentage change in demand by the percentage change in price.

However, the buyer does not decide indiscriminately in the targeted demand. The following factors play an important role:

  • the buyer's income or financial resources
  • other prices offered on the market for comparable goods
  • Usage estimates for the selected product

Matching supply and demand

Sobald das Angebot und die Nachfrage übereinstimmen, hat dies zufolge, dass ein Market equilibrium aufkommt. Ist dies der Fall, wird über den Equilibrium price and the equilibrium amount spoken.

In a graphic in which the two sizes are entered in a coordinate system, the market price and the quantity intersect and the two new sizes result by moving from the intersection in the middle to the left and down in the coordinate system.

The opposite case arises from what is known as a market imbalance. Here there is either an excess supply (price is too high and not all goods are sold) or excess demand (high demand = price can be increased).

Summary

  • Supply and demand are important terms in the market economy
  • these should ideally be in balance
  • Luxury goods are independent of equilibrium
  • Market equilibrium = match between supply and demand
  • Market imbalance = no match between supply and demand
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