Changes in what people like to buy can really affect how things are sold in the market. Market equilibrium is when the amount people want to buy matches the amount available for sale at a certain price. When what consumers want changes, it affects both what people are willing to buy and what companies are willing to sell, which then changes prices and how much of a product is available.
Let’s start with demand. Demand is just how much of a product people want to buy at different prices. Imagine electric cars become super popular because folks care about the environment. This means more people want to buy electric cars. Here’s a simple way to see this:
Now, at the original price , people want to buy more cars than there are available. This creates a shortage! Because of this, prices go up, and companies start making more electric cars. Eventually, the new price becomes , and more cars are available at quantity .
Now let’s look at the opposite situation. If people start liking bicycles more than electric cars, then fewer people will want to buy electric cars. This causes the demand curve to shift left:
To deal with fewer sales, companies making electric cars might cut back on how many they produce. This could create too many electric cars for sale at the old price. To sell these extra cars, prices might drop even more until a new balance is reached.
In short, when what people like to buy changes, it affects the market balance. Whether more people want a product or fewer people do, what happens with demand and supply will determine the price and how much is available. It’s important for both buyers and sellers to understand these changes to make smart choices.
Changes in what people like to buy can really affect how things are sold in the market. Market equilibrium is when the amount people want to buy matches the amount available for sale at a certain price. When what consumers want changes, it affects both what people are willing to buy and what companies are willing to sell, which then changes prices and how much of a product is available.
Let’s start with demand. Demand is just how much of a product people want to buy at different prices. Imagine electric cars become super popular because folks care about the environment. This means more people want to buy electric cars. Here’s a simple way to see this:
Now, at the original price , people want to buy more cars than there are available. This creates a shortage! Because of this, prices go up, and companies start making more electric cars. Eventually, the new price becomes , and more cars are available at quantity .
Now let’s look at the opposite situation. If people start liking bicycles more than electric cars, then fewer people will want to buy electric cars. This causes the demand curve to shift left:
To deal with fewer sales, companies making electric cars might cut back on how many they produce. This could create too many electric cars for sale at the old price. To sell these extra cars, prices might drop even more until a new balance is reached.
In short, when what people like to buy changes, it affects the market balance. Whether more people want a product or fewer people do, what happens with demand and supply will determine the price and how much is available. It’s important for both buyers and sellers to understand these changes to make smart choices.