SUPPLY AND DEMAND (POPYT I PODAŻ) - what are they? We are considering whether to buy a given product...
Imagine you have just entered a store and you are looking at a new model of a smartphone. What do you like about it? What don’t you like? Would you buy this product?
You have decided.
Now imagine that the qualities of the product or the situation in which you are buying it, have changed.
Would you still buy it ?
What has changed?
For example:
1) the product has changed its colour to bright green
2) you already have this product at home
3) your friend has it and is happy
4) this model is outdated
5) it costs 30% less than it cost last month
6) it costs 20% more than it cost last month
7) it is twice as expensive
8) it is half the price
That said, what do you think makes people (consumers) want to buy (purchase) a product?
Various things such as:
– the fact that you already have it,
– how far the store is located from your home,
– if it is possible to return it,
– prices of competitive products,
– the colour or the shape,
– individual preferences, for example emotions you have for the product as it will improve your well-being
And what is the major reason for which you decide to buy a product?
Usually it is its PRICE.
DEMAND is about how people react to the product price change and SUPPLY is about how producers react to the product price change.
What would customers’ reaction be if the product got more expensive?
What would the producers’ reaction be?
And what if it got cheaper?
How would producers react in that situation?
The lower the price, the more willing customers are to buy the product.
And conversely, the higher the price, the more willing producers are to sell the product, because it means MORE PROFIT.
To better understand the two basic economic concepts, watch these clips: