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ECONOMICS (Supply (DETERMINANTS OF SUPPLY (Number of sellers, Technology,…
ECONOMICS
Supply
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The Law of supply states that quantity supplied and price are directly related; as supply goes up, price goes up, and as supply decreases, price decreases.
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Demand
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The Law of Demand states that quantity demanded and price are inversely related; as demand goes up, price decreases, and as demand decreases, price increases.
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STORY TIME
Excess Supply: Every July 4th, fireworks stores end up having some excess stock of fireworks. Because a large percentage of firework purchases are done immediately preceding July 4th, these stores have great difficulty trying to sell off these fireworks. Some stores even lose money due to inability to sell enough stock.
Excess Demand: In The Boy who Harnessed the Wind, William Kamkwamba tells the story of how his village (in the mid-2000s) had difficulty getting enough water every day to drink and use for cooking. He decided to build a windmill to power an automatic water pump to meet this need; however, demand for his windmill's power was too great, and Mr. Kamkwamba was forced to spend a great deal of effort (along with his relationship with his father) to construct a bigger windmill to meet all this demand. The extra demand for the windmill was problematic for the farming industry in his village because the farmers were hit hardest by the water shortage.
