The study of microeconomics is central to any course or program in economic studies and builds upon vital economic theories, and implements several empirical economic processes. It can become challenging often, and many students require professional economics homework help numerous times.
supply and demand, in economics, relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. It is the main model of price determination used in economic theory. The price of a commodity is determined by the interaction of supply and demand in a market.
Clear ideas about key concepts are essential to scoring well and mastering microeconomics. Go through some critical insights on one of the most crucial concepts in microeconomics—supply & demand.
Critical Concepts of Supply & Demand in Microeconomics
Microeconomics is a subset of economics that studies economic activities at the microcosmic level. While it may differ in scale, scope, and context, the supply and demand concept application remains the same.
One of the primary purposes of economic theory is to devise ways to meet ever-increasing demand and keep supply lines alive despite limited resources.
The law of demand states that as prices of a particular commodity increase or decrease, consumers will purchase less or more of that commodity. The cost of a commodity is thus inversely related to its market demand.
Marginal utility is a metric that defines the change in the utility derived from a particular commodity. accounting assignment help online The utility of a commodity is the use/pleasure one derives from its consumption.
The law of supply states that the higher the price of a good, the higher its supply will be. Unlike demand, supply has a direct relationship with the price of a commodity. Higher prices allow suppliers to extract a higher profit from the sale of a commodity.
However, certain non-price factors are associated with the supply of a commodity, which can affect it accordingly. They are resource prices, technology, tax & subsidies, regulatory policies, future market & price trends, number of sellers, and the prices of competitive commodities. Read Also- What Are Laravel Development Services?
Market equilibrium is achieved when supply equals demand. It indicates that no force will cause any further change in price and, therefore, the quantity of a particular commodity in the market.
Price elasticity of demand is a process to test how consumers respond to changes in the price of a commodity. The relative amount by which a commodity price changes and the consequential change in its demand is the price elasticity of demand.
The elasticity coefficient is a metric to determine how consumers respond to changes in the price of a commodity. The midpoint price elasticity coefficient uses the mid-points of the price and quantity differences. Read Also – Exploring Different Ways to Use Python
Here’s the formula for the midpoint price elasticity coefficient à
- The price elasticity of supply determines how suppliers respond to changes in the market price of a commodity. The price elasticity of supply is determined by three specific time frames: market period, short-run, and long-run.
- Another key aspect of microeconomics is the idea of incentives and behaviors.
It looks at incentives as tactics to achieve loss aversion. Conjectures in this theory suggest that people’s behaviours change according to the losses they encounter. If their income goals act as reference points, they will do everything possible to ensure minimal losses.
However, their efforts will dumb down once they achieve said goals.
Incentives and disincentives play a central role in behavioural economics, as they tend to induce behavioural changes in people. For example, discounts on the price of a commodity will shoot up its demand and inadvertently affect its supply. Again, if the price of that commodity shoots up for some reason or other, then that’s an incentive for consumers to avail of a similarly lowered-priced commodity.
Well, that’s all the space we have for today.
Mastering micro or macroeconomics is all about diligent studying and loads of practice. And, remember—if you need microeconomics assignment or homework help, always look for reputed academic service providers online.
All the best!
Summary: Understanding supply and demand is the basis of understanding economics in all its variation. Revise your ideas and concepts with this article.
Author-Bio: Alley John is an economics professor from a world-renowned university in the United Kingdom. He also provides economics homework help at MyAssignmenthelp.com, a leading academic service provider in the UK.