Market Demands, Demands of Market

The quantity of Market Demands in a competitive Free Market aggregates the individual demands with respect to a particular commodity. They are equalized with the quantity of Market Supplies through the fluctuations in the price of goods and services available in a market with a considerably large size. Price (of goods and services) therefore acts as an equalizer that works effectively in balancing the volume demanded by the consumers and the volume supplied by the suppliers so that an equilibrium is maintained in the market.

An effective equilibrium between this and Market Supplies helps in keeping the prices of goods and services in the market more or less stable. This means that prospective customers do not have to shell out more money that will only increase the profits of the suppliers while simultaneously stretching their own resources to the limits or exceed it. At the same time a stable market also provides relief to the suppliers for they are then aware that they do not have to sell their products at subsidized prices by either reducing the margin of their profits or suffering losses.

So it is evident that the economy of the market including the price and quantity of things bought and sold, is after all regulated by Market Demands and Market Supplies and does not change on its own. The size of the market is very important in this regard.

A market with a single producer and many consumers functions according to the wants of the producer who enjoys a monopoly. Such a producer, in the need to maximize the profits from the sales of his products, adjusts the prices and quantity accordingly. Such a market is not at equilibrium because the prices are higher and even the quantity offered at those prices are usually lower in comparison to a competitive Free Market. A market with a lone consumer amidst numerous sellers is equally dis balanced for here the consumer forces the sellers to lower their prices to meet the criterion of his demands.

However the economic theory of this and Supplies cannot be applied in a small market with only a handful of producers (sellers) and consumers (buyers) as in such a case Market Supplies become directly proportional to Market Demands, that is, a change in any one directly affects the other.

The Law of Demand refers to the consistent relationship between the this and Market Supplies. According to this law, whenever there is a rise in the prises of goods and services , the demand of those same goods and services automatically fall considering the other factors remain the same, and vice versa.