Alfred Marshall developed the principle of supply and demand around the 1700s.
He was the originator behind the thought process of supply and demand. The general principle is simple.
It’s when someone is supplying a resource or commodity, and there’s a need for that resource. For example, if everyone wanted to buy toothbrushes but there wasn’t enough supply for them, it would drive up the prices.
Typically, the demand for something will drive up the price for a resource. That’s how supply and demand works. But there’s also a lot more to it.
Here’s a guide that goes into supply and demand to give you a more comprehensive understanding of how it works.
When Prices Are High
One of the principles of supply and demand is that when prices are high, the demand is lower.
For instance, if there is a limit of supply for a resource, then the price will be higher because the commodity or resource is fewer and far between.
Companies that can’t churn out millions of products may have to raise the price because there is a limited production of a product.
If there is a general consistent demand for something, prices will steadily rise higher because there’s consistent interest in a product. There’s an equilibrium.
When Prices Are Low
You might be wondering, when it comes to economics or macroeconomics, what about when prices are low? Why are prices low, and how does it affect demand?
The economics of supply reasons that when prices are low, it’s because the supply of something is abundant.
To use the toothbrush example, if there were an influx of toothbrushes being made, but it exceeded the demand for them, then the price of toothbrushes would be lower.
The price is lower to attract more interest in buying something. Only the demand for something will drive prices.
Factors Affecting Supply
One of the factors that affect supply and demand in the workforce. It’s how many people can produce a resource for the public.
If the resources available to make a product or rare and hard to come by, it can also drive up prices.
Labor and resources are a huge part of what affects supply and demands. If the quantity of something desirable to make is in demand, it could cause more people to want it because it’s rarer to have.
You can also learn about the law of supply and demand when it comes to internal talent opportunities.
Now You Know the Law of Supply and Demand
When it comes to the law of supply and demand, there’s a lot you have to know. There’s a lot that goes behind the economics of supply and demand.
This article provides insight into that law and how it works. You have a better idea of how the demand for a product can affect the price of a product and the supply for it.
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