- Difference between demand and quantity demanded
Demand is the consumers’ willingness and ability to buy a good in the market. It is usually represented by the relationship between the price and the demand curve and its change is represented by a movement along the demand curve. On the other hand, the quantity demanded is the actual sum of a good that customers are willing and able to buy in a market at any given time and price and its change is represented by a shift in the demand curve. (Frank & Bernanke, 2001)
- Demand change with substitute’s price change
A substitute is a good that can serve the same need as served by a certain good hence the ability to serve as an alternative for consumers. Therefore, when its price falls, there is an increased preference for it by consumers hence an increase in its demand and a fall in demand of the other good and a rise in its price reduce its attractiveness hence increasing demand for the other product as people shift to the relatively cheaper good. A good example of substitute goods are Tea and coffee. Although the two are different products, they serve the same purpose as beverages hence the ability for customers to substitute one for the other. In that respect, a fall in price of coffee increases its demand reducing the demand for Tea and vice versa. (Barron & Lynch, 1989)
- Supply and demand for Blue-Ray Discs
Demand and supply of a good interacts in a market to determine the market equilibrium price and quantity. In that respect, both supply and demand are crucial in determining the trend that a good’s price takes hence the declining price of the Blue Ray Discs being a result of supply and demand interaction. With increased popularity in the market, the Discs’ producers enjoyed an economic profit that attracted other producers into the market increasing production hence supply level. In addition, the technology used in production of the discs presents economies of scale advantage to the producers hence ability to lower production cost as they increase the discs supply. In that respect, the increased supply from both increased producers number and the low production cost resulted to an outstripped demand hence a decline in price despite the discs’ prior popularity. (Frank & Bernanke, 2001)
Works Cited
Barron, J. & Lynch, G. (1989). Economics. London: Richard D. Irwin Inc.
Frank, R. & Bernanke, B. (2001). Principles of Microeconomics. New York: McGraw
Hill/Irwin
