Supply and demand is one of the most basic and fundamental concepts of economics and of a market economy. The relationship between supply and demand results in many decisions such as the price of an item and how many will be produced in order to allocate resources in the most cost-effective and efficient way.
Examples of the Supply and Demand Concept
Supply refers to the amount of goods that are available. Demand refers to how many people want those goods.
- When supply of a product goes up, the price of a product goes down and demand for the product can rise because it costs loss.
- At some point, too much of a demand for the product will cause the supply to diminish. As a result, prices will rise. The product will then become too expensive, demand will go down at that price and the price will fall.
- Supply and demand should reach an equilibrium. The amount of goods being supplied is the same as the amount demanded and resources are allocated efficiently.
Examples of the Law of Supply
- Corn crops are very plentiful over the course of the year and there is more corn than people would normally buy. To get rid of the excess supply, farmers need to lower the price of corn and thus the price is driven down for everyone.
- There is a drought and very few strawberries are available. More people want the strawberries than there are berries available. The price of strawberries increases dramatically.
- A huge wave of new, unskilled workers come to a city and all of the workers are willing to take jobs at low wages. Because there are more workers than there are available jobs, the excess supply of workers drives wages downward.
Examples of the Law of Demand
- A popular artist dies and, thus, he obviously will be producing no more art. Demand for his art increases substantially as people want to purchase the few pieces that exist.
- A cultural fad item that was all-the-rage for a period of time falls out of favor and is no longer "cool." Demand for the item falls dramatically as it is no longer the must-have item of the season.
- A new restaurant opens up in town and gets great reviews. There are only 12 tables in the restaurant but everyone wants to get a reservation. Demand for the reservations goes up.
How the Law of Supply and Demand Works
- A company sets the price of its product at $10.00. No one wants the product, so the price is lowered to $9.00. Demand for the product increases at the new lower price point and the company begins to make money and a profit.
- The company could lower the price to $5.00 to increase demand even more, but the increase in the number of people buying the product would not make up money lost when the price point was lowered from $9.00 to $5.00. The company leaves the price set at $9.00 because that is the point at which supply and demand are in equilibrium. Raising the price would reduce demand and make the company less profitable, while lowering the price would not increase demand by enough to make up the money lost.
These are examples of how the law of supply and demand works in the real world.
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Supply and Demand Examples
By YourDictionarySupply and demand is one of the most basic and fundamental concepts of economics and of a market economy. The relationship between supply and demand results in many decisions such as the price of an item and how many will be produced in order to allocate resources in the most cost-effective and efficient way.
If you hear the word “economy” and your only thought is that you need to get to your local warehouse store to buy another economy-size container of cheese puffs, it’s probably good that you’ve decided to read this post for a few ideas for your upcoming economics essay.
So wipe your hands of that sparkling cheese dust, and let’s take a look at 10 economics essay topics to help you get started with your economics essay.
10 Economics Essay Topics That Will Improve Your Bottom Line
I’ve included a broad list of topic ideas with suggestions on how you might develop the topic into a specific type of paper, such as an argument, compare and contrast, or pros and cons essay.
Keep in mind that your prof may, of course, have different ideas as to what type of assignment you should be writing. In other words, read your assignment guidelines closely.
Within the list of economics essay topics, I’ve also included several sample essays for added inspiration. So make sure to check them out as you scroll through the topics.
1. Supply and demand
Gas prices are an excellent example of supply and demand. Gas prices often rise in the summer due, in part, to the high demand of summer travelers. If the prices rise too high, however, demand falls, there is a surplus of gas, and thus prices will usually fall.
If you’re writing about supply and demand, you might write an informative essay to simply explain the supply and demand of a product. You could also write an argument essay about how supply (or prices) should be higher or lower based on the market.
2. Culture and economics
A discussion about culture and economics might revolve around several cultural groups and how they impact the economy. Or the discussion might focus on one specific group (such as millennials) and how they affect the economy.
I’m sure you’ve purchased your share of products in your lifetime. So writing about consumerism might be one of those essays in which you can share personal experiences. Perhaps you can even discuss how and why you spend, and how it has affected your life.
(Think cause and effect essay—did overspending on those concert tickets put a big dent in your budget? How did this affect your spending the following week?)
4. Historical overview
A historical overview economics essay could take the form of a comprehensive overview of a specific time period (and its impact on society).
An overview might also focus on one specific component of the economy (such as interest rates or technology) and trace its impact throughout a time period.
An introduction to the history of…
Immigration is another one of those topics that lends itself to a cause and effect essay.
You might consider the impact of immigrants (either legal or illegal) in an entire country, one region, or one city. Or you might consider the impact of immigrants on an industry, such as farming.
You could also take another approach. Discuss what would happen to the economy if immigrants were no longer allowed to enter the country. Or conversely, you could discuss what would happen if current immigrants left the country.
6. Trade policies
If you’re writing about trade policies, perhaps explain how policies impact one country. You could also try comparing and contrasting the policies of two or three different countries.
7. Interest rates
Ever buy something with a credit card and then look at your statement the next month to see how much you’re paying in interest? (It’s painful. Try to pay off your credit cards ASAP!)
This personal experience with credit card interest rates might help you envision how interest rates can affect purchases in a larger company. It might also help you understand how and why interest rates may change.
Have an awesome idea for an explanatory essay about interest rates but just can’t seem to get the words in place? Check out 4 Proven Ways to Keep Writer’s Block From Ruining Your Essay.
Recessions affect just about everyone. If you know people who’ve lived through a recession (or two), their insights might be just what you need to add a local perspective to your research.
Need a few ideas to help create a survey for your economics essay? Read How to Write Perfect Survey Questions for Your Paper.
Some amount of inflation can actually be good for an economy. But if inflation increases too much, it can cause some instability and discourage spending and economic growth.
Making a list of the advantages and disadvantages is the perfect start to writing a pros and cons essay about inflation.
10. Employment rates
Employment rates and the economy go hand in hand. If your goal is to explain how the two are connected, this is the perfect time to brush up on your research paper skills. That might include brushing up on MLA or APA citation styles.
Writing an economics essay doesn’t mean that you throw out a bunch of ten-dollar words that you learned in class just to make yourself sound smart. You also shouldn’t add those words just to fill up space to meet word count.
Once you settle on one of the above economics essay topics, check out these resources to help you keep your word choices economical:
Don’t forget: Kibin editors are also here to help with word choice–and all things related to your essay.
Psst... 98% of Kibin users report better grades! Get inspiration from over 500,000 example essays.