Hello everyone and how are we all doing today, it's another wonderful today and it gladens me to be making this phenomenon post today on this community.
For two long they above been so many who have oftener wonder why business seems unfair and why prices seems to always go up, well my post today hopes to a answer your questions so please hang in there.
The word market interaction can be seen to be the cumulation between two words which ordinarily mean two separate things but when Brought together within the same contest they signify meaning to one particular subject.
This is any location whereby buyers and sellers meet to exchange goods and services, market may be a physical location or a virtual location as the case may be.
This is the friction which exist between two or more individuals over the course of reaching an agreement, an interaction must be within two parties at least and it follows a process of negotiations before an agreement is being reached.
This is the friction which exist between both parties which are considering doing business together, this friction occurs inorder for an agreement to be reached between buyers and sellers for a price which would favour both the buyer and the seller.
For the exchange of goods to take place both buyers and sellers must have reached an agreement which they both feel is favourable to them, for either party would feel reluctant to let go off Thier goods if they feel they aren't getting a favourable deal, hence forthsu process to be reached they have to be an interaction between both this parties.
Supply and demand.
In every trade they are two main parties and this are the supply and demand parties it is through the interaction of this two that a favourable price can be reached.
They supply is also called the seller for they are the onces who provide the goods and services for sale.
The seller are the ones in charge of what is being sold in the market hence they can control the amount of goods which would be sold in the market but they are unable to control the price for which this goods would be sold, it is only through market interaction can the price do goods be ascertained.
The demand is also called the buyer for they are the onces who demand the goods which are supplied buy there sellers.
Goods offered in the market have to be bought buy a ceetuaj party and they demand party are they onces for whom goods are essentially provided for if there is no demand they would be no supply hence demand is often the primary aim of any production.
Production would only take place if they is a demand for such hence many products which have real life uses are often not produced because of no real demand.
This is the optimal point of production which favours both the supply and the demand. In such a way that they would be willing to sell and buy at this prices.
For an equilibrium price and quantity to be reached they are various factors which play a very important role such as.
More supply than demand.
When they is a high supply of goods and services the equilibrium price tends to be lower and the equilibrium quantity tend to be higher.
This is because at this point they are so many sellers or goods and services that the consumers have the opportunity to choose from a variety and due to competition sellers would reduce price to the barest minimum in which they can make normal profit so as to attract customers.
More demand than Supply
When the number of goods demanded is higher than the number of goods supplied it creates what is known as an artificial scarcity and in such a situation the equilibrium price is often very high and the equilibrium quantity low.
This is because buyers are willing to pay very high amount of money to obtain the scare goods hence sellers can easily charge astronomical amounts for Thier products.
This is a situation wherby they are equal number of buyers and sellers in the market hence one single party cannot impact the prices of good and services.
They are ample number of sellers and buyers in this market hence the price would be in the middle such that both buyers and sellers won't be cheated.
The prices of goods and services always demands on the supply and demand sector hence price can never really be fair as at any given point either the supply is more or the demand is more.
The only way to achieve true equilibrium is what is known as price control this is an entirely different topic and I would be happy to discuss it on my next post.
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