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Assignment on:
Balancing of demand & supply &their
impact on price
Submitted To :
Adita Barua
Assistant Lecturer
Faculty of Business Administration
Cox’s Bazar International University
Submitted By :
Abdullah Bin Omar
ID: 180090100268
Department of Business Administration
9thBatch,
5thSemester.
Introduction
The market is an amazing instrument, it enables people who have never met and who know
nothing about each other to interact and do business. Supply & demand is perhaps one of the
most fundamental concepts of economics and it is the backbone of a market economy. The
two basic terms used most often by economists are supply and demand. The amount of
something that is available – the supply – and the amount of something that people want – the
demand – make up a working market. The market is the way in which an economic activity is
organized between buyers and sellers through their behavior and interaction with one another.
Buyers, as a group, determine the overall demand for a particular product at various prices
while sellers, as a group, determine the supply of a particular product at various prices.
• Demand refers to how much (quantity) of a product or service is desired by buyers. The
quantity demanded is the amount of a product people are willing to buy at a certain price; the
relationship between price and quantity demanded is known as the demand relationship.
• Supply represents how much the market can offer. The quantity supplied refers to the
amount of a certain good producers are willing to supply when receiving a certain price. The
correlation between price and how much of a good or service is supplied to the market is
known as the supply relationship.
1.Price:
2. Cost of Production
3. Natural Conditions
4. Technology
5. Transport Conditions
6. Factor Prices and their Availability
7. Government’s Policies
8. Prices of Related Goods
The factors which affect the price determination of the product are:
1] Product Cost
2] The Utility and Demand
3] The extent of Competition in the Market
4] Government and Legal Regulations
5] Pricing Objectives
6] Marketing Methods Used
Most retailers, with the exception of “giants” such as Wal-Mart, will tend to order through a
wholesaler. The wholesaler must anticipate the demand from retailers and have stock on hand
to meet this demand.
Bargaining Power of Farmers. Farmers, who sell commodities in relatively small quantities,
ordinarily have very little bargaining power. Since the same commodity from different
farmers is considered identical, the farmer can in theory sell all his or her product at the
market price but cannot sell at a higher price. In practice, however, many of today’s
commodities transactions take place electronically and/or through brokers. This means that
there may not be reliable information about market prices available and that the buyer will
have the upper hand in negotiations. The farmer could try to get bids from different buyers,
but that will take a great deal of time away from the farmer’s work of actually producing
crops. So it is true that product prices are depends on demand & supply.
Conclusion
In this assignment, we've discussed fundamental concepts in economics - supply and demand.
Hopefully the forces that cause changes in supply and demand aren't mysterious anymore.
The balancing of demand & supply on impact on price
The law of demand describes the behavior of buyers. In general, people will demand - that is
buy - more of a good or service at lower prices than at higher prices. When this relationship is
graphed, the result is a demand curve.
A change in price results in movement along the demand curve from one point to another and
is called a change in the quantity demanded. When other factors in the market change, the
demand curve shifts to the left or the right. This is a change in demand.
The law of supply describes the behavior of sellers. Remember sellers and supply both begin
with s. In general, sellers will supply more of a good at higher prices than at lower prices.
When this relationship is graphed, the result is an upward-sloping supply curve.
A change in price results in movement along the supply curve from one point to another. This
is called a change in the quantity supplied. When factors in the market change, the supply
curve shifts to the left or the right. This is called a change in supply.