Economics (the law of demand and supply) Essay Example | Topics and Well Written Essays - 1500 words

Economics (the law of demand and grant) - Essay ExampleThe toll that slew atomic number 18 willing to pay for a certain product correlates with the quantity of goods supplied be supplied by the suppliers in the market. In economic terms, the law of supply states that the legal injury of the product plays a pivotal component in determining the amount of goods that kindle be produced at a certain period since this is what people will be willing to buy at that moment. Thus, the law of supply is directly related to the price of the product habituated that it shapes the behaviour of suppliers. The relationship between the price of the product and the quantity supplied can be graphically illustrated using graphs called supply curve balls. As going to be explained, it can be seen that there is a movement along the supply curve as well as a mooring in position of the same supply curve to the left or to the reclaim as a leave of discordant reasons. As such, this essay seeks to e valuate the main difference between movement along the supply curve as well as a shift in position of the supply curve. confused factors that can contribute to the shift in the supply curve are too going to be outlined and discussed in detail. According to Kotler and Armstrong (2004), a supply curve is used to show the quantity of products that can be supplied into the market at a particular price. This curve is diagrammatically presented in an upwardly set up where each point along the slope depicts the price of the goods and the quantity supplied at that particular moment.... If the price is high, this also entails that the level of supply is also high since the producers will be willing to supply more which is potential to result in the generation of more revenue which constitutes the basics of every business. As such, there is an upward or downward movement along the supply curve as shown in Figure 1 below. Figure 1 Source http//www.investopedia.com/university/economics/econ omics3.asp As illustrated in the graph above, points A, B and C are showing the relationship between the price of the product and its supply. An upward movement along the supply curve from point B to C shows that an subjoin in the price of the product also means an increase in supply. It can be seen that P2 is move that P3 while at the same time Q2 is lower than Q3. harm is the major determinant of the movements along the supply curve. The movement can also be downward where lower prices will mean the quantity supplied is low as well. The higher the price, the higher the products likely to be supplied given that more revenue will be generated as a result of high prices. On the different hand, a shift in the supply curve occurs when there is a change which is parallel to the authoritative position of the supply curve. This shift can be on the left side or right side of the original supply curve. When this shift occurs, the price of the product remains the same (Netmba, 2010). Th ere are other variables which are different from price change that can cause the supply curve to shift either to the left or right side of the original supply curve. For instance, an improvement in manufacturing engineering can lead to a shift in the supply curve. There are also various factors that can cause the supply curve to shift as