Demand and Supply

WHAT IS DEMAND AND SUPPLY?

          Demand is a word that is also related as wants. For instance, when goods or services are free, people would simply just demand what they want because it is free and not a part of their income would be used up. However, supply is limited because it is related to the factors of production or in other words, resources. The amount that a firm is able to supply depends greatly on their resources and technology used.

APPLE COMPANY

http://www.forbes.com/sites/connieguglielmo/2012/09/17/apple-says-iphone-5-demand-outstrips-supply-as-pre-orders-shatter-previous-record/ 

          A study has shown that on the 14^th of September 2012, the Apple Company’s new product which is the iPhone 5 that has “set a record and has already surpassed its initial supply, with some customers who pre-ordered the device now having to wait until October to get their hands on the slimmer, lighter new smartphone”(Guglielmo, 2012). This shows that the firm is having a shortage in their product because there is an increment in the demand with no change in supply. In other words, it means that the demand for their product, the iPhone 5 has gone over the limit compared to their supplies which is not enough. When the demand for iPhone 5 increased, the demand curve would shift to the right and at their original price, there was a shortage. 

Shortage Graph

          In order for the firm to have a market equilibrium price for the iPhone 5, the firm has to have a movement up along the supply curve. Therefore, this would cause the equilibrium price to rise and the equilibrium quantity to increase as well.

(Rightwards shift of the demand curve and the movement upwards along the supply curve)