ECO550- Discussion Forum 1 (week 1)

ECO550- Discussion Forum 1 (week 1) - attempt to ensure...

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Supply, Demand, and Equilibrium As stated in our textbook Economics for Managers , Supply is defined as the functional relationship between the price of a good or service and the quantity supplied by producers in a given time period, all else held constant. (Farnham, 2010. P. 28) Nonprice factors influence the supply of a service or good as well; these various factors include the price of goods related in production, future expectations and the number of producers. Products that are costly to provide will naturally be in a smaller supply as the producer wouldn’t want to invest money to make a product or service that they’re not promised they will sell all of their units of. In the event that producers can predict that a certain material used in the production of a good will rise, the producer can adjust pricing to substitute now for the future price shift in materials. There are so many label brands for various products that the producers of these products will obviously have some level of competition in providing the lowest price for their good, in an
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Unformatted text preview: attempt to ensure that they’ll be the top selling provider. Demand is defined as the functional relationship between the price of a good or service and the quantity demanded by consumers in a given time period, all else held constant. (Farnham, 2010. P. 19) This being said, demand also is impacted by a consumers desire and ability to purchase a product at a specific price. If a good or service is priced too highly for a consumer, they’re more likely to look for an alternative brand that may be less, such as an off-brand label or a completely different item all together that could provide the same thing but at a reduced price. Equilibrium is the situation in which the supplied item is equal to its demand. If there is neither a shortage nor surplus in the market there is no need for the item’s price to vary or change. Sources Used: • Farnham, P.G. (2010). Economics for managers (2 nd ed.) Upper Saddle River, NJ: Pearson Education Inc., Published as Prentice Hall....
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This note was uploaded on 01/14/2012 for the course ECO 550 taught by Professor Gooding during the Spring '09 term at Strayer.

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