The Determining Factors of Supply and Demand in a Market

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The Determining Factors of Supply and Demand in a Market

Economics is the study of the production and distribution of wealth

and how resources are distributed for the production of goods and

services within a social system. Economics provides the language,

principles and a way of thinking to help people unravel why they have

to make choices. (www.google.co.uk)

Throughout this assignment I am going to discuss the main factors that

determine the quantities supplied and demanded in the UKmarket for

shoes.

"Supply is the amount of goods available at a given price at any time.

Demand is how many consumers desire the goods that are in supply."

When there are many people in the market, no one person or firm has

any real control over the market price or the total quantity sold.

Consumers are all unique, but they do share some common attributes.

They do be inclined to react to market circumstances in similar ways.

The demand relationship identifies the similarities across buyers.

The amount of people demanding shoes can radically increase or

decrease each week in relation to both internal and external factors

of the market. The demand curve can be defined as the "graphical

representation of the relationship between the demand for a good and

its price, drawn on the assumption that everything else affecting

demand remains unchanged.

One major factor that affects the demand for shoes in the UK is price.

UK consumers are extremely price conscious and value driven. If prices

in shoes rise then the demand for them will decrease. Although if

shoes are brought onto the market at good value for money then the

demand for those shoes ...

... middle of paper ...

...eduction in quantity supplied at every price and therefore

shifts the supply curve to the left.

Changes in unit labor costs or capital costs can affect supply.

Materials such as leather are needed to produce shoes. If the cost of

leather was to decrease then the quantity of shoes would increase,

shifting the supply curve to the right as shown below.

In conclusion you should normally assume that higher prices are

associated with a smaller quantity demanded. Quantity demanded at each

price will change when any number of outside factors changes. Changes

in income, other prices, and basic preferences will cause the original

demand numbers to either increase or decrease. The interaction of

supply and demand determines the market price and the quantity sold in

the market. The market price is called the equilibrium price.

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