Demand and Supply

• Market: a medium of interaction between buyers and sellers of products
• Types of Markets:

  • Consumer Market
  • Producer Market
  • Resource Market
• Demand: the willingness of a consumer to buy a commodity at a given price
• Supply: the quantity of goods that a seller is willing to offer for a sale
• The forces of supply and demand work together in markets to establish prices
• Surplus: the amount by which the quantity supplied is higher than the quantity demanded
• Shortage: the amount by which the quantity demanded is higher than the quantity supplied
• Market Equilibrium: The point where they achieve balance is the equilibrium price
• Substitute goods: price of a substitute good and demand for another good are directly related
• Complementary good: there is an inverse relationship between the price of a good and the demand for the other