Supply and Demand


For people to succeed in their businesses, careers or professional lives, action is an imperative ingredient. However, it matters where people base their action.

For instance, if individuals base their action on self-interest, they will automatically act in response to inducements. In other words, they will start monitoring costs and benefits closely. The two, costs and benefits, can affect the activities that people do.

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Take for example when the costs of doing something increases or better still, when the benefits decline. Automatically, people will perform much less of that activity. Economists have come up with a model – the model of supply and demand – that explains how action on costs and benefits can affect our markets (Schenk, 2008, p.

1). My firm specializes in the business of milk production and dairy farming. Of lately, dairy farmers in United States, Australia and New Zealand have received high prices from the sale of milk, thanks to the ever-changing climate and trade policies. Additionally, the stiff competition for animal feeds has caused the doubling of the prices as farmers also incur additional expenses.

Thus, the increase of income, limited supply of milk, external economic changes and social economic changes are some of the factors that change the demand of milk (Birkinshaw, 2007, p.1).

What are some things that would affect changes in supply?

A number of factors affect the changes in supply of products or services. For example, the rate of production is paramount to the supply of products such as milk. Less production of commodities strains the supply chain, while abundant production means, goods will be available in the market in plenty. Demand is also another factor that affects the supply of commodities.

In case of high demands, manufacturers have to produce more. On the same note, cost is also another factor that affects changes in supply is cost. Whenever the cost of commodities reduces, the demand becomes high thus, calling for more supply. A good transport network can enhance the supply of commodities, as goods will reach the market in time. Additionally, government regulations and trade policies can also affect the supply of commodities. For instance, government can enact legislation aimed at restricting certain commodities from reaching the market. Finally yet importantly, unscrupulous business practices can affect changes in supply, where a few dishonest individuals plot bureaucratic means of controlling the supply chain of any product or service (Buchot, 2011, p.


How to change the quantity demand

One factor that can change the quantity demanded is price. In fact, it is the demand price that is enables the movement of commodities along the demand curve. The phrase “a change in quantity demanded” simply implies the amount of commodities that the consumers are keen and able to buy. Once the demanded price changes, it will definitely affect the amount of commodities that people will buy. For instance, if the demanded price increases, people will buy less goods and vice versa. Undoubtedly, the change in demand price will also affect the movement along the demand curve although the five determinants stay unaffected.

Mathematically, the quantity demanded of a particular commodity is a strapping function of the demanded price (Regan, 2007, p.1).

Effects of raised minimum wage

Whenever the government increases the minimum wage by even a slight percentage, it affects businesses negatively. For example, in my dairy farm, I will definitely cut jobs in order to sustain my business. Additionally, there will be no more hiring of people to work in my firm, as I do not wish to incur more expenses than revenue. Additionally, the price of milk per is likely to increase due to increased expenses. This means that consumers will have to buy milk at an increased price – something that will affect the quantity demanded (Bernstein, 2004, p.


Reference List

Bernstein, J. (2004). Minimum Wage and Its Effects on Small Business. Retrieved March 24, 2011, from Birkinshaw, V.

(September 4, 2007). A Thirst for Milk Bred by New Wealth Sends Prices Soaring. New York Times. Retrieved March 24, 2011, from

com/2007/09/04/business/worldbusiness/04milk.html?_r=1> Buchot, E. (2011). USA market: Changes in supply. Retrieved March 24, 2011, form

com/USA_market_changes_in_supply.html> Regan, E. (June 20, 2007). Milk demand stays strong despite high prices. Reuters. Retrieved March 24, 2011, from> Schenk, R. (2008).The Model of Supply and Demand. Retrieved March 24, 2011, from


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