Teams in the 21st Century

Running head: Supply and Demand

Supply and Demand and Price Elasticity

Danielle Parker-Lee, Mario Quiroz, Quintin Whitaker, Jimmy Robinson, and Shannon Thomas

University of Phoenix

Supply and Demand and Price Elasticity

Economists pay close attention to supply and demand and price elasticity. Supply deals with the behavior of sellers in relation to the quantity and price of a good or service and demand refers to the quantity desired by consumers (Investopedi, 2009).   Price elasticity measures consumers’ sensitivity to changes in price (Mackinac Center for Public Policy, 1997). These three concepts are the backbone of any economy.
Many factors determine the supply and demand for any product or service. Depending on the product or service, there can be a variety of things that will either benefit or decrease the growth of the business. For example, in the textbook “The Principles of Economics,” the example used is ice cream, and because this particular product seems more seasonal than it can have a more factors that determine a low or zero demand. For instance, on a cold winter day the demand for ice cream would be far less than on a hot August day. The cost to maintain and produce this product would be more expensive in the colder seasons of the year. “The hot weather alters consumers’ desire to buy at any given price and thereby shifts the demand curve.” (Mankiw, 2007, page 79).
Market equilibrium can be defined as having the exact amount of a certain product that equals the amount of the product that is demanded by the consumer (Mankiw, 2007). Within market equilibrium neither a surplus of a product or a shortage of a product occurs, and because of this equilibrium, the tendency for the price of the product to change is uncommon. Once changes are being made to either the price of a product or the quantity in which the product is being produced, the market equilibrium that surrounded the product when the price and quantity remained the same, no... [continues]

Read full essay