2 - Supply and Demand

Abstract

This chapter explains the concept of supply and demand. Every market has two sides: buyers and sellers. The buyers' side of the market is called demand. Demand is a description of how people decide how many and what kinds of goods and services to purchase. The demand curve shows the amount of intended purchases at every price. Many factors can influence demand. The quantity purchased depends largely on the price of the good in question, but it is also influenced by the income of buyers, the prices of other goods, tastes, preferences, and styles. The sellers' side of the market is called supply. Supply denotes how sellers determine the amounts and kinds of goods to offer for sale. The supply curve shows the quantity supplied at every price. Many factors influence the amount of a good offered for sale. The price of the good involved has an important effect on the quantity supplied.