Paper Topic:

Economics

DEMAND AND SUPPLY OF TXJ

Introduction

The theory of demand and supply tends to explain the behavior of sellers as well as buyers as far as price and quantity of goods supplied and purchased is concerned . This model encompasses two scenarios i .e . the quantity supplied and the quantity demanded . It is in fact two theories in one i .e . the law of supply and the law of demand

According to the inventor of this theory , Adam Smith , the quantity supplied by the suppliers would be high if the price is high

. The converse is true there is a direct proportional relationship between price and quantity supplied

However , there is an inverse relationship between the price and quantity demanded i .e . the higher the price the lower the quantity demanded ceteris paribus .The relationship between the price and quantity can be represented by the following diagrams

Literature

A demand schedule shows the effect of a given intensity of demand upon the amount of a commodity that will be brought over a certain range of prices . Generally less of a commodity will be sold at a high price than at a low price this is because , as price falls more people can make their wants effective , but as price raises only those within the higher income groups continue to afford to purchase . It is possible , therefore to draw up a schedule for a particular commodity showing the quantities demanded per week 9or other period of time ) at different prices

While preparing...

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