Have you ever wondered why the price of a toy or a video game changes over time? Or why some products are readily available while others are hard to find? The answer lies in a fundamental economic concept called supply and demand.
Supply refers to the amount of a particular product that is available for purchase. Demand, on the other hand, refers to the amount of a product that people want to buy. When the supply and demand for a product are balanced, the price remains steady. But when the demand for a product increases and the supply stays the same, the price goes up. And when the supply is greater than the demand, the price goes down.
Let’s take an example: Imagine that you are a toy manufacturer and you have 100 toy cars to sell. If only a few people are interested in buying toy cars, the demand is low. You might have to lower the price to attract buyers. But if there is a sudden increase in demand, say because of a popular movie, you can increase the price because people are willing to pay more for the toy cars.
Similarly, let’s say you are a farmer and you grow strawberries. If the weather is good, you will have a good harvest, which means you will have a lot of strawberries to sell. But if there is a drought and your crop is smaller, the supply of strawberries will decrease. If people still want to buy strawberries, the demand will stay the same or increase, and you can raise the price.
How supply and demand affects prices and availability
Supply and demand affects the prices and availability of goods and services in many ways. For example, if there is a high demand for a particular product, companies may produce more of that product to meet the demand. This can lead to more competition, which can lower the price.
On the other hand, if there is a shortage of a product, companies may not have enough supply to meet the demand. This can cause the price to increase because people are willing to pay more to get the product.
The concept of supply and demand can also affect the job market. For example, if there are many job openings in a particular industry and not enough people to fill those jobs, the demand for workers goes up. This can lead to higher salaries and better benefits for workers in that industry.
In conclusion, supply and demand is an important economic principle that affects the prices and availability of goods and services. By understanding how supply and demand works, you can make better decisions as a consumer and understand why certain products cost more than others.
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