Microeconomics is the motion associated with decisions made at a low level or otherwise known as a micro level. More precisely defined as by about economics (2014) as "the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions affect others". Therefor a key part of microeconomics and the main question of this part which what is supply and demand and the relationship they have between each other. .
Supply is defined by Geoff Riley (2008) as "the quantity of a product that a producer is willing and able to supply onto the market at a given price in a given time period". Demand is defined by Business Dictionary (2014) as Desire for certain good or service supported by the capacity to purchase it". When thinking about demand and supply together, the supply relationship and demand relationship basically mirror each other at equilibrium. At equilibrium, the quantity supplied and quantity demanded intersects and are equal. Within breaking down these factors;.
Demand refers to how much (E.G Quantity) of a certain product or service is desired by buyers.
Supply refers to how much the market can offer. The quantity supplied shows and refers to the amount of a certain product/goods that producers are willing to supply when receiving a certain price.
Within looking at the relationship between supply and demand, factors show that the relationship provides the forces behind the allocation of resources. Within looking at the different market economy theories, supply and demand will allocate resources within a business by using the most efficient way possible. In other words, the higher the price of the product, the low the quantity demanded will be. To explain the relationship, here is a small diagram which starts with a simple demand curve. The main points you can see within this diagram is that as the price increases, demand is reduced.
