UNIT 3 Essay

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1 Unit III Essay: Demand, Supply, and Equilibrium Nguyen Pham Columbia Southern University ECO 2302 - Principles of Macroeconomics Professor Sayim October 4, 2023

2 Unit III Essay: Demand, Supply, and Equilibrium Introduction This essay will start with a few basic definitions of supply and demand curves, the shift of the curves and their causes. The essay author will move to select an industry of interest and discuss the status of the supply and demand of the industry’s products. The essay will conclude with a discussion regarding the factors that caused the supply and demand curves to shift for the industry products or services. Demand and Supply Curves Demand curve and supply Curve show the relationships between price and the quantity demanded. Demand curve shows the relation between the price of an item or service and the quantity that the customers are willing to buy (McEachern, 2018). The demand curve shifts left to decrease when there are determinants such as changes in consumer tastes and preferences, change in the number of buyers, etc. The curve shifts right to increase when there are more demands for such service or item. One of the determining factors for the demand curve to shift right is when the consumers’ incomes increase. The increased demand of toilet paper and cleaning supplies during the COVID-19 pandemic is an example. The movement along the demand curve happens when the price and the quantity demand both change. The shift in demand curve occurs when the price stay the same, but the quantity demanded change. Supply curve shows the relation between the price and the quantity supplied. Supply curve has an upward sloping and shifts due to the price of production, increase or decrease in taxes and government subsidies, etc. A change in price causes the movement along the supply

3 curve. A change in one of the determinants of supply that is not price causes a shift of supply curve (McEachern, 2018). For examples, when the manufacturing cost increases for locally produced items, it shifts the supply curves to the left decreasing the quantity supplied. Another example is the COVID-19 vaccines, thanks to the Government’s subsidies and assistance, the vaccine supplies increased while the cost stayed as low as $0 for the consumers. Another example can be found in the 2023 research paper published by the Tropical Animal Science Journal, the import tariff policy in Indonesia caused the dairy prices to increase (Priyono et al, 2023). Shift of Demand or Supply vs Equilibrium Equilibrium in the market is found at a point where the demand curve intersects with the supply curve. The equilibrium price ensures a balance between market supply and market demand (Aspromourgos, 2019). In a research paper published by the Academic Search Ultimate, the pricing rule is based on the equilibrium of production and demand (Pinhão et al, 2022). A shift in demand curve to the right will change the equilibrium point where prices and quantity are higher than before. On the other hand, a rightward shift in the supply curve will lead to decrease in the equilibrium price of a commodity and an increase in the equilibrium quantity. Industry of Interest For this essay, I have chosen the technology industry as the industry of interest. I will focus on Apple inc. and Apple’s products. The current market indicates that the demand of Apple products is still high although Apple can’t fulfill its customers’ demand. The supply constraint is caused by the manufacturing shutdowns because of the COVID-19 pandemic (Tatevosian, 2022).

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4 The demand of Apple products increases not because of its price but because of the perceived quality and changes in tastes and preferences of the consumers. Therefore, the demand supply curves and shift to the right (Ivy Panda, 2023). Regardless of many available options on the market, consumers still have a perception that Apple’s products are top quality. Conclusion Understanding the basic concepts of demand and supply is critical for managing a business, creating a new product, starting a new company, or leading an organization or government agency, etc. By having the product-price set at the equilibrium point, businesses will avoid wasting resources and generate more profits. Business managers with in-depth knowledge and understanding of supply and demand can minimize risks, make informed decisions, and maximize profits for the organizations.

5 References Aspromourgos, T. (2019). What Is Supply-and-Demand? The Marshallian Cross Versus Classical Economics. Review of Political Economy, 31 (1), 26-41. Ivy Panda (2023). iPhone Demand and Supply Theories Essay. https://bit.ly/46Eoncr McEachern, W. A. (2018). Econ Macro (6th ed.). Cengage Learning US. https://online.vitalsource.com/books/9781337671804 Pinhão, M. et al (2022). Electricity Spot Price Forecast by Modelling Supply and Demand Curve. Academic Search Ultimate, 10( 12), 2012-N. Priyono et al. (2023). Impact of Import Restrictions Policy on Dairy Supply and Demand in Indonesia. Tropical Animal Science Journal, 46 (3), 375-381. Tatevosian, P. (2022). Has Apple Finally Matched Supply and Demand? https://www.fool.com/investing/2022/07/21/has-apple-finally-matched-supply-and- demand/

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