Explain how the interaction of supply and demand in a market

Explain how the interaction of supply and demand in a...

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Jeffrey Welter 12JUL06 BUS-115 Explain how the interaction of supply and demand in a market economy determine 1) which goods and services get produced, 2) in what quantities and, 3) at what price. In mixed economies suppliers determine what products and or services to provide by consumer demands. If one product is not in great demand, then the suppliers will not produce that item. Producing items that are in demand will create a better chance for the supplier to make a profit. Suppliers produce goods and services that are in high demand. The price people are willing to pay for a good or service greatly determines the quantity a supplier will supply. “Generally speaking, the amount supplied will increase as the price increases because sellers can make more money with a higher price.” (Nickels, McHugh, and McHugh 43) If a product is in high demand, and people are willing to pay a higher
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Unformatted text preview: price, suppliers will supply more of that product. Equilibrium price is where the supply curve and demand curve intersect for one particular product. A supplier selling something at an outrageous price would not have many sales. If the seller lowered the prices then more people would buy the product, creating more profits. After a equilibrium price has been established, prices are determined by market price. The demand for a product, the quantity demanded, and the price people are willing to pay would be one half of the market price. The other half would be how much suppliers are willing to sell a product for, in what quantity, and at what price. Together suppliers and buyers determine the market prices based upon meeting the best interests of each. Works Cited Nickels, McHugh, and McHugh. Understanding Business 7e. The McGraw-Hill Companies, 2004...
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This note was uploaded on 12/08/2009 for the course BUSN BUSN1115 taught by Professor Forgot during the Spring '08 term at DeVry Chicago.

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Explain how the interaction of supply and demand in a...

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