WEEK 8 Free Post

This week, I am going to show a very basic Economic models to explain how does the economist analysis the market.

Demand and Supply: In the market, the suppliers are the households, and firms, which produce goods and provide goods to the market; the demanders are the customers who buy the goods. The x-axis is the quantity, and the y-axis is the price. As we analyze, as the quantity of supply increase, the price also increase. We can conclude that there are more people want to but the product, thus the price would go up as the quantity increase. On the other hand, as  the quantity of demand increase, the price decrease. We can see that when there are more people want to buy the product, the price would drop to let the customer to buy more good. The equilibrium shows that when the supply equal to demand. The equilibrium point can show how many product should produce at what price.

According to the wikipedia, "the supply and demand is an economic model of price determination in a market.

The model can only give us a general overall of the market. In the reality world, the market won't go the exactly same as show in the diagram above. Some firms always produce more goods than the quantity show at the equilibrium points.

Work Cited:

Heakal, Reem. "Economics Basics: Supply and Demand". Investopedia. 2013. Web. Oct. 31.2013