流利说商务英语Level5-Unit2-Part5-Low-of-Supply

流利说商务英语Level5Unit2Part5LowofSupply&DemandLet'slookfurtherintohowpriceaffectssupplyanddemand.SupplyanddemandcurvesThisdiagramshowssupplyanddemandcurves.Theverticalaxisrepresentsthepriceoftheproduct,andthehorizontalaxisrepresentsitsquantity.Thesupplycurveshowshowthesupplyofproductsisaffectedbychangesinprice.Thedemandcurveshowshowthedemandforaproductisaffectedbychangesinprice.ThelawofsupplyThelawofsupplystatesthatasthepriceofaproductgoesup,supplywillalsogoup.Whenthemarketpriceishigh,sellerswillcreatemoresupplybecausetheywanttomakemoremoney.Ontheotherhand,ifthemarketpricedeclines,lesssupplywillbecreated.ThelawofdemandThelawofdemandstatesthatasthepriceofaproductgoesup,demandwillgodown.That'sbecausefewerconsumerswillwanttobuyaproductiftheythinkthepriceistoohigh.However,ifthepricegoesdown,therewillprobablybeagreaterdemand.Thesupplycurveshowshowthequantitysuppliedbybusinessesisaffectedbychangesinprice.Thedemandcurveshowshowthequantitydemandedbyconsumersisaffectedbychangesinprice.Thedemandforaproductdecreasesasitspriceincreases.PriceelasticityPriceelasticityindicateshowthedemandforaproductisaffectedbyitsprice.Ifpeoplebuymoreorlessofaproductasitspricechanges,thedemandforitiselastic.Ontheotherhand,ifdemandisnotaffectedbyprice,itisinelastic.Forexample,peoplewillpayforwaterevenifthepriceishigh,becausetheyneedittosurvive.EquilibriumEquilibriumoccurswhensupplyanddemandinamarketarebalanced.Inthediagram,itisthepointwherethedemandcurvemeetsthesuppliercurve.Whenamarketisinequilibrium,thereisneitherashortagenorasurplus.Asaresult,pricesbecomestable.Ifpeoplebuylessofaproductwhenthepricegoesup,orbuymoreofitwhenthepricegoesdown,itsdemandiselastic.Equilibriumiswhentheamountofaproductavailableequalstheamountthatconsumerswanttobuy.Thedemandforelectricityisinelasticbecausepeopleneedtoliveregardlessoftheprice.