Supply And Demand: Economic Concepts And Their Importance In The Market

By: Khasano­va Farangiz Fark­hodov­na

Abstract.

In this arti­cle, the nec­es­sary infor­ma­tion on the top­ic “Sup­ply and Demand: Eco­nom­ic Con­cepts and Their Impor­tance in the Mar­ket” is sci­en­tif­i­cal­ly record­ed. 

Key words.

Sup­ply and demand, finance, eco­nom­ic con­cepts and their impor­tance in the mar­ket.

Enter

Demand and sup­ply in the econ­o­my are the main fac­tors that deter­mine the prices of goods and ser­vices in the mar­ket. Demand rep­re­sents the needs of con­sumers for a good or ser­vice, and sup­ply rep­re­sents the will­ing­ness of pro­duc­ers to pro­duce this good or ser­vice. Their inter­ac­tion shapes mar­ket prices and plays an impor­tant role in the allo­ca­tion of resources.

Demand

The con­cept of demand refers to the need by con­sumers for a cer­tain amount of goods or ser­vices at a cer­tain price. The law of demand can say: if the price increas­es, the demand decreas­es, and vice ver­sa, if the price decreas­es, the demand increas­es. This sit­u­a­tion is close­ly relat­ed to the bud­get lim­its and per­son­al desires of con­sumers. Changes in demand can be influ­enced by sev­er­al fac­tors, includ­ing income lev­els, the num­ber of con­sumers, and the avail­abil­i­ty of oth­er sub­sti­tutes or com­ple­men­tary goods.

Offer

Sup­ply refers to the quan­ti­ty of a good or ser­vice that pro­duc­ers have avail­able in the mar­ket at a giv­en price and at a giv­en time. Change in sup­ply depends main­ly on pro­duc­ers’ desire for prof­it and pro­duc­tion costs. Accord­ing to the law of sup­ply, as the price ris­es, pro­duc­ers will be will­ing to sup­ply more of the good or ser­vice because high­er prices allow them to make more prof­it.

The Rela­tion­ship between Sup­ply and Demand

The inter­ac­tion of sup­ply and demand in the mar­ket deter­mines prices. If demand exceeds sup­ply, prices will rise. Con­verse­ly, if sup­ply exceeds demand, prices may fall. The equi­lib­ri­um state of the mar­ket is the time when sup­ply and demand are equal, in which case the mar­ket price is in equi­lib­ri­um.

Mar­ket Prices and Eco­nom­ic Changes

Changes in sup­ply and demand shape the eco­nom­ic sys­tem by chang­ing prices. For exam­ple, if new tech­nolo­gies increase effi­cien­cy in pro­duc­tion, sup­ply will increase and prices will decrease. On the oth­er hand, glob­al prob­lems or nat­ur­al dis­as­ters can reduce demand.

Sum­ma­ry

The inter­ac­tion of demand and sup­ply is the basis of the eco­nom­ic sys­tem. They con­sti­tute the main mech­a­nisms of the mar­ket econ­o­my, form prices and facil­i­tate the effi­cient allo­ca­tion of resources. Any changes in the mar­ket are asso­ci­at­ed with changes in demand and sup­ply, and their inter­ac­tion affects the sta­bil­i­ty and devel­op­ment of the econ­o­my.

Khasano­va Farangiz Fark­hodov­na

1st year stu­dent of the Finance depart­ment of the Uni­ver­si­ty of Infor­ma­tion Tech­nolo­gies and Man­age­ment. He was born on July 26, 2006 in the city of Karshi, Kashkadarya region. His nation­al­i­ty is Uzbek. Unfin­ished high­er edu­ca­tion.

His father, Polvonov Fark­hod Khasanovich, was born on Sep­tem­ber 24, 1964. Uzbek nation­al­i­ty, high­er edu­ca­tion.

Moth­er Rad­jabo­va Gul­noza was born on 04.04.1971. Nation­al­i­ty is Uzbek.

Used lit­er­a­ture

1.Samuelson, P. A., & Nord­haus, W. D. (2010). Eco­nom­ics (19th ed.). McGraw-Hill.

2. Mankiw, N. G. (2018). Prin­ci­ples of Eco­nom­ics (8th ed.). Cen­gage Learn­ing.
3. Mishkin, F. S. (2015). The Eco­nom­ics of Mon­ey, Bank­ing, and Finan­cial Mar­kets (10th ed.). Pear­son Edu­ca­tion.
4. Kizilo­va, O., & Egam­berdiev, E. (2020). “The Role of Sup­ply and Demand Con­cepts in Eco­nom­ics.” Jour­nal of Eco­nom­ics and Man­age­ment, 15(4), 45–52.