Demand, Supply and Price Elasticity (CASE 1)

            The Supply and demand is the backbone of any market economy. The demand is refer to as how much the buyers in the market are willing to buy a particular product. The demands of the product are very much depends on the prices of product in the market.  The supply refers to as the availability of particular amount of product and service in the market. The prices in the market are very much depends on the demands and supply in the market. For any economy to maintain the equilibrium, the balance between the demand and supply in the market is very important. The demand and supply in the economy is very much depends on the buying power of the customer. The more buying power of the customer is the indicator of rapid growth of economy (Kramer, 2018).

        The prices of food is also a good example, as If the food commodities demand is high, but the food commodities availability is lower than standard, prices of the consumer for food will piercingly increase. Paying more money on food will have an effect on buying power of consumer. The customers have to spend more money on food, that make the customers spend less to spend on other products. Consequently, the food commodities supply and demand would have spillover effects on all other elements in economy of consumer (Bianca, 2017).

        Price elasticity measures the quantity demanded or supplied responsiveness of a product to a price change. The Price elasticity is calculated as proportion change in demanded or supplied quantity separated by percentage price change. Increment in the prices typically lower demand and increased supply usually result in demand increases. On the other hand, the supply of products acts in response to demand in a different way, with demand of product is less responsive to prices as compare with others. Some of the economists illustrate this sensitivity as demand price elasticity; the products that have demand sensitive to the pricing are said to be price elastic. On the other side the Inelastic pricing point to a weak price control on the demand.

The equilibrium price is best market situation for any product, where there is an intersect on the supply and demand patterns. In this state of affairs, a product consumer demand intimately balances with the supply available. Here the product price remains stable relatively; it would create predictable market. The overall growth of economy can happen with a lot of instances equilibrium price if there are some of the economy parts where supply catch up with the demand.

References of Supply and Price Elasticity (CASE 1)

Bianca, A. (2017, September 26). How Demand & Supply Affect Economic Growth. Retrieved from https://bizfluent.com/info-8623022-demand-supply-affect-economic-growth.html

Kramer, L. (2018, June 19). How Does the Law of Supply and Demand Affect Prices? Retrieved from https://www.investopedia.com/ask/answers/033115/how-does-law-supply-and-demand-affect-prices.asp