How does Supply and Demand affect pricing?

The past week we have been taking about how supply and demand affect the price of a product. We also did a game where there was a shortage of ice and people had various reasons as to why they need the ice. There were two methods for getting the ice. The first method was a first come, first serve basis. A majority of us sat down because of the benefit of the ice was lower than the opportunity cost to wait for the ice. The second method was where we found out everyone's benefit of the ice and found out the equilibrium price so everyone would get the ice at a fixed price. From this activity, we learned that when supply decreases and demand increases, the equilibrium price increases.

Now I'll talk about what supply and demand is. Supply represents how much the market can offer. Demand refers to how much of a product or service is desired by consumers. Supply and demand is an economic price determination in the market. It pretty much sums up that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers, resulting in an equilibrium of price and quantity.

There are four basic laws of supply and demand:

1.      When demand increases while supply remains the same, it leads to a higher equilibrium price and quantity.

2.      When demand decreases while supply remains the same, it leads to a lower equilibrium price and quantity.

3.      When supply increases while demand remains the same, it leads to a lower equilibrium price and higher quantity.

4.      When supply decreases while demand remains the same, it leads to a higher equilibrium price and lower quantity.

When supply and demand are equal the economy is said to be at equilibrium. When this happens, the allotment of goods is at its most efficient because the number of goods that are being supplied is the same as the number of goods being demanded by consumers.  Therefore, everyone is satisfied with the current condition. At the current price, the suppliers are selling their goods and consumers are receiving the goods that they are demanding. There can also be a disequilibrium when there is an excess of supplies or excess of demand. If the price of a product is set too high, an excess of supply will be created and there will be allotment inefficiency.  Excess demand happens when the price is set too low and because of this too many consumers want the goods while producers aren't making enough of it.

My analysis

In conclusion, I think that having an equal amount of supply and demand is good for the economy. Both producers and consumers are satisfied because producers are making the right amount of goods so consumers get what they wanted.