Chapter 4

Chapter 4 focuses heavily on three subjects: Supply, demand, and how they affect the economy together. Both supply and demand have their own curves that each depend on different factors, but ultimately combine and meet to create the equilibrium point, where all the factors involved lead to both supply and demand being the same. The equilibrium point. while ideal, needs to actually be reached first. At any point in time, both supply and demand curves may shift through their own means, but the goal is to always try to shift back in a way to be as close as possible to the equilibrium point. Having more or less of a product than what the market demands causes surplus and shortages, creating problems for sellers who then try to find ways by highering or lowering prices, or other means for what the issue may be. Prices can affect both the supply and demand curve, as sellers may see an increase in price as more profitable, therefore getting more of the good in stock, while customers on the other hand may believe that such a high price means they may have to buy either substitutes if available, or inferior goods that are cheap and work well enough to not have to purchase the original good. Supply and demand is an intricate system that showcases how buyers and sellers will react to change in goods, and how resources will be used and allocated to cater to the ever changing market of a variety of goods, with all businesses, small and large, affected by how everyone responds to the ever changing market.