It is perhaps one of the most fundamental tenets and provides a fundamental framework in which to assess the actions of an economy.
Definition of Demand: Demand is the quantity of a good (or service) the buyers are willing to purchase at a particular price.
If there is an excess of demand, the producers have to gauge the nature of demand first (seasonal, increasing trend) to react in a swift fashion, to corner the market and retain the existing customers.
The stable state of equilibrium in an economic system makes the economy efficient, the suppliers are moving their goods and the consumers are getting what they are demanding.
And all other random things kept constant for a good (brand, quality etc.); higher the price— lower will be the demand from the consumer (to save up for other purchases). Time also plays a huge role in a free-market economy, more so in the case of entities in a competition to serve the consumers.
Higher the price, higher will be the supply from the manufacturers (make hay while the sun shines! Stock-outs are no good for a supplier as it affects the brand and the consumer can move elsewhere.An interesting backdrop to consider here — the fundamental assumption that we need to make for the whole economic system (as we know it today) to work is that human beings are motivated by pure self-interest and will take decisions that they think will make them ‘better off’ now or sometime in the future.The economic and political systems of a country are closely inter-linked and jointly determine the well-being of its citizens.In this video, “The Economics of Term Sheets,” Kupor demystifies the term sheet, giving a brief tutorial for current and potential founders on how to understand the economic terms commonly used.Kupor walks us through the core definitions and concepts, elucidating what they mean as well as how to think about implications and consequences for your company of different clauses down the road. (“a16z”) personnel quoted and are not the views of a16z or its affiliates.Just to appreciate the grandeur of this simple idea, just imagine your standard of living in a world where you have to produce everything for yourself.You would likely revert to a medieval lifestyle, growing your own food and defending our own property.Moreover, the prove to be an icing on the cake — the production cost per unit decreases as we produce more and more of the same units (the initial one-time setup cost can be a major part of the total expense).And the best part is that both parties are better off after doing the transaction (and so is Mother Earth, for less wastage).Two branches within the subject have evolved thus: microeconomics (individual choices) which deals with entities and the interaction between those entities, while macroeconomics (aggregate outcomes) deals with the entire economy as a whole.A typical college student (or an overburdened husband?