Good Day hejq-ga,
Demand and desire are closely related and can be defined as:
"Desire refers to people's willingness to own a good. Demand is the
amount of a good that consumers are willing and able to buy at a given
price."
Source: Introductory Economics Revision Notes: Supply and Demand
URL: http://www.bized.ac.uk/stafsup/options/notes/econ207.htm
To add further to the description, demand also exists when people need
to own a good. It is much easier to increase the price of a good when
it is needed, and not just wanted. For example:
Gasoline is something most people would consider a need. If the price
of gasoline has declined and the industry wishes to artificially
inflate it, the industry could reduce supply. Now there is a danger
that not every gas station will get the gasoline they require. In fear
of losing business to competitors, they are probably going to be
willing to pay more to get the gasoline they require to fulfill their
customer?s needs. The increased acquisition cost is now passed on to
the customer who probably has little choice but to pay the higher
price. Increasing prices by reducing the supply of items that are a
need is easily achieved. If the number of people who need the product
is greater than the number of people that can have it, a bidding on
the product will begin. If this occurs often enough, the price of the
item will probably increase to create a swifter and quicker selling
process. Those who cannot afford the item or are not will to pay for
it will be weeded out before they even get in line.
With wants, prices require more "balancing". A user can either choose
not to buy the item at all, or purchase a similar item which is "no
name", or simply cheaper. Assuming the user wants the item bad enough
and there are others who want it just as much, the producer can
decrease the supply, and charge the merchant a higher price. The
merchant will pay the higher price, because s/he knows that the
consumer wants the item bad enough to pay more money for it. In short,
a decreased supply can spark something similar to a bidding war. If
there is only one item, and two customers really want it, only one can
have it in the end. Both customers will put out more and more money on
the table to receive the item, until one will determine that the item
is not worth any more than they already have bid. They might shift
their demand to a different item, or abandon the want all together,
but not before the winner of the bidding war has paid a higher price
than the item was originally available for. This demonstrates how a
lack of supply has increased a selling price. As with the previous
example: if this occurs often enough, the price of the item will
probably increase to create a swifter and quicker selling process.
Those who cannot afford the item or are not will to pay more for it
will be weeded out before they even get in line.
To find out more about demand and supply and how they can bid up
prices, here are a few links to some interesting web site with more
information on the subject:
Web site: Introductory Economics Revision Notes: Supply and Demand
URL: http://www.bized.ac.uk/stafsup/options/notes/econ207.htm
Web site: Economics of Supply
URL: http://ecedweb.unomaha.edu/Dem_Sup/supply.htm
Web site: Principles of Economics
URL: http://www.aw.com/info/ruffin_gregory/toc.html
Thank you for your question, I hope that this answers your question
well. Should this not be the case, please ask for a clarification
before rating my answer.
Search strategy: Google search:
"supply"+"demand"+"price"+"economics"+"competition"
Thank you.
slawek-ga |
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