Understanding The Competitive Market
Here’s an explanation and graphs of a competitive market.
1. Provide at least one example of a variable that affects the supply curve and at least one example of a variable that affects the demand curve.
2. Think of a product or service that you use in your everyday life or workplace. Describe how the supply or demand of this product might be changed.
I will post the student responses for you to reply to:
Student 1 (Anthony)
If a company has received better technology that can reduce the cost of manufacturing their product, there would be a shift to the right on the supply curve. Thus, giving a company an opportunity to create more products for the same value. In order for there to be a shift in demand there could be any number of instances to happen. One could be that the item is seasonal. No one is looking for a sweatshirt in the midst of July. Therefore, the demand for sweaters would take a hard shift to the left.
A common item that I use everyday is a writing utensil. Whether it be a pen or a pencil the effects are the same. We live in the age of technology where the demand and supply for these items are shifting far left. I was talking to a few coworkers about how I just recently purchased a pen and notebooks for the classes that I am taking (they are much younger than I for the most part) and they stared at me in bewilderment. They asked me why do I not just open the notes application on my laptop and write notes that way. That is how I know that the overall demand for pens/ pencils has shifted to the left. People just do not use them as often as the have in previous years. Now I know that there is still some demand for them because of people learning how to write in elementary school and other reasons, but my point is in the grand scheme of things it has decreased exponentially.
Student 2(Blake)
Hello everyone,
An example of a variable that affects the supply curve is technology. With technology constantly advancing and suppliers looking for avenues to improve their efficiency, a larger quantity of product can be manufactured at a lower cost. Technological advancements also allow the supplier can also manufacture the good faster.
An example of a variable that affects the demand curve is income. In a high-income area or regarding a person that received a pay raise, there may be more intent to purchase goods than before. The demand for a specific good will rise as it will be affordable and available. On the contrary, a low-income area or regarding a person that is unemployed, there may be much less intent to purchase goods than before. The demand for a specific good will decline. Although this good is available, it is no longer affordable or deemed a necessity.
A product that I use in my everyday life is toilet paper. Supply for this product might be changed due to other products, such as a bidet or wet wipes. Demand of this product might be changed due to catastrophic events, such as potential destructive weather or illnesses. For example, the demand for toilet paper at the beginning of the coronavirus pandemic was so high that it created a shortage. Also, if a hurricane is expected to affect your location, people tend to stock up on food and common household items, to include toilet paper.
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