Supply and Demand
Supply and demand. These are the two components of any economic construct. They are very simple terms to understand. Supply is the availability of something while demand is the need. In any market, there are 4 basic stages. High supply and high demand, high supply and low demand, low supply and high demand, low supply and low demand.
HIGH SUPPLY AND HIGH DEMAND In this economic stage we have a product that is readily available, or easily acquired. We also have a lot of need or desire for that product. This leads to a fairly balanced market where value is equally derived from the producer and the consumer. The balance in this market translates to fairly stable price transactions. There is not a lot of volatility or change in the price from transaction to transaction making things fairly predictable.
HIGH SUPPLY AND LOW DEMAND In this economic stage we have a product that is readily available (or easily acquired) but we don’t have a lot of need or desire for the product. Th