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저작시기 2006.11 |등록일 2006.12.11 워드파일MS 워드 (doc) | 3페이지 | 가격 1,500원

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In a present day, we are living in a competitive market that has so many buyers and so many sellers. A market is any arrangement that bring buyer and sellers together. The law of supply and demand is an important idea in the course of everyday life, so today; the supply and demand model is one of the fundamental concepts of economics.
The principle of supply and demand states that if too many people want something, the price of that thing will go up. The word "supply" usually refers to the availability of the product. The word "demand" usually refers to the desire to have that product. The price level of the product is determined by the point at which quantity supplied equals quantity demanded. The point is called equilibrium. At the given price, suppliers are selling all the goods that they have produced and consumers are getting all the goods that they are demanding. Thus, everyone is satisfied with the current economic condition. But if a lot of people want a certain item and there is a limited supply of that item, the price goes up. But, then, if nobody wants a certain item, there is plenty of it and the price drops. That is how the law of supply and demand works.

For example, if Britney Spears’s new album is released, and people would want to buy it. If company release CDs for $20, and only hundreds CDs were released because the opportunity cost is too high for suppliers to produce more. If, however, the hundreds CDs are demanded by 200 people, the price will rise because, according to the demand relationship, as demand increases, so does the price. Consequently, the rise in price will prompt more CDs to be supplied as the supply relationship shows that the higher the price, the higher the quantity supplied.

참고 자료

www.unf.edu/~traynham/ch04lecture.pdf / EBS economic study book
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