Supply and demand

Selected topic:

I choose to study the supply and demand essay, this is because supply and demand in the market is the cause of the price we pay for goods in the market, and the equilibrium point determines the price of goods.

I choose this topic because there is a lot that is associated with demand and also supply, everything either a good or a service in the market has demand and its supply. The prices of a good are determined by demand and supply and that a change in either the quantity demanded or quantity supplied will result to a change in the price, this is an interesting economic concept that is very important in understanding the market.

Core lessons:

The first lesson I learn from this essay is the fact that the supply and the demand is determined independently, and this is because the supply is determined by the supplier and the demand is determined by the buyers of goods and services.

The other lesson I have learnt is that the price of commodities in the market will shift up or down and the prices will only stop moving when the quantity supplied and the quantity demanded are equal and this is referred to ads the point of equilibrium. The diagram below shows the equilibrium point:

Supply and demand

The other thing learnt from the essay is the issue of excess demand and excess supply, excess demand is calculated by getting the demand minus supply, excess supply is given by the supply minus the demand, the importance of excess demand and excess demand is that the induces competition in the market, excess demand induces competition among buyers which eventually brings the prices of a product up, while excess supply induces competition among the suppliers which will eventually bring the price of a good down.

Activities

Given the following prices and demand for urgent care services there are various activities that were recommended and they include:

Determining whether the urgent care services are on the supply side or on the demand side and the answer is that they are on the supply side, also determining whether at price \$10 the market is at equilibrium and this is that at this price the market is not at equilibrium. Other activities that I was able to perform as to determine the excess supply and excess demand on urgent care services.

In the tutorial there were no activities that I was unable to perform, all the issues regarding demand and supply were well explained and very help full in understanding the issue of demand and supply.

The new concept learnt from this tutorial:

From the tutorial I have learnt that the market can be manipulated by the suppliers in a way to encourage certain buying habits or to discourage them, the given example in the tutorial is that of pregnant women being promised free fast food after visiting the prenatal visits, the demand for prenatal care increases, in discouraging buying behaviour a tax will be imposed on harmful

Supply and demand

drugs like cigarettes which will increase their prices and bring the quantity demanded down.

## References:

Economics tutorial (2007) demand and supply, retrieved on 2nd October, available at http://hsp m.sph.sc.edu/COURSES/ECON/SD/SD.html