LovesTheTeam.com

Instructions

1

The buyer makes a demand for products,which will depend not only on the taste preferences of the buyer, but also on his income, prices of goods and substitute goods (substitutes). In quantitative terms, demand is determined by the volume of goods that a buyer can and wants to purchase over a certain period of time.

2

In the economy there is a law of demand. It consists in the fact that with the rise in prices for products, the demand will decrease. Indeed, the more expensive the product, the less consumers can afford to buy it. The law of demand has the opposite effect, that is, if the price of a commodity decreases, demand will increase.

3

The relationship between demand and price of goodsreflects the elasticity of demand for price. Elasticity shows the sensitivity of demand when the price changes. The change in demand, calculated as a percentage, may be higher or lower than the percentage change in price. Demand can react not only to price changes, but also to changes in the income of the consumer himself, in this case, the elasticity of demand for income is calculated. The elasticity index has practical application. I focus on the elasticity index, the seller can adjust its pricing policy. For example, if the product has a high elasticity of demand at a price, then as a result of a decline in the price of a product, you can achieve a significant increase in sales.

4

The proposal reflects the volume of goods thatthe seller can and wants to sell at a certain price. The size of the offer also depends on price and non-price factors. For example, the volume of supply depends on the technological features of production and on ensuring the production process with the necessary resources.

5

Enterprises profitable to realize the producedproducts at the highest possible price. The law of the proposal is that, with an increase in the price of the products, sellers will increase the supply. The market price of the offer is formed by the action of the market mechanism, that is, the minimum price at which sellers sell their goods on the market.

6

The sensitivity of the proposal to price changesalso reflects the elasticity index. If the product has a high elasticity of supply at a price, then with an increase in prices, the producer must increase the volume of production. Expansion of production will take time and cost, therefore, manufacturers, most often, can not immediately react to changes in the prices of goods.

7

Change in supply and demand can be reflected insimple two-dimensional graph. On the abscissa axis, the volume of demand is reflected, and the ordinate is the price. The demand and supply curves will reflect the relationship between price and sales volume, and the kind of schedules will depend on the elasticity. At the intersection of the supply and demand lines, an equilibrium price is formed, at which the volume of demand for the goods will be equal to the volume of the supply of this commodity.