<p>I understand Demand vs. Quantity Demanded but I"m having trouble understanding Supply vs. Quantity Supplied.</p>
<p>Quantity Demanded basically states that…well rather law of demand states that as the price of something decreases, quantity demanded increases…so:</p>
<p>Price per DVD…Quantity Demanded
$5…10
$4…20
$3…30
$2…40
$1…50</p>
<p>Understandable - as the price decreases, we want more.</p>
<p>But SUPPLY seems much different…</p>
<p>It states that as the price of a good or service rises, quantity of a goods or service increases. I don’t understand this. </p>
<p>Who decides price? The producer
Who buys the good/service? The consumer from the SUPPLIER</p>
<p>Supply Curve Chart:</p>
<p>Price per DVD…Quantity Supplied
$5…60
$4…50
$3…40
$2…30
$1…20</p>
<p>Why in the world doesn’t go DOWN/produce an inverse relationship? Shouldn’t you buy more items if the price decreases (aka BUYING IN BULK)? Someone explain this please. Thank you.</p>
<p>Price is determined by the market, the repeated dealings between suppliers and demanders [consumers.] It’s theoretically the equilibrium point between a supply curve and a demand curve [where they intersect], if you’ve done any economic graphing [I’m assuming you’re taking Economics in school right now or something.]</p>
<p>Basically, suppliers want to sell their product for a high price. If the price consumers are willing to pay is higher, they will naturally want to make more of that good/service [increase their profits.] Consumers, however, typically want to buy that product for a low price. The equilibrium point is somewhere in between. That point is usually attained through repeated interactions between consumer and supplier in the market. </p>
<p>The second table you’ve put up here is just a supply curve chart. It concerns only suppliers, who will naturally supply more of a product if consumers will pay more for it. It is not necessarily what consumers will pay in the real world, but it is what suppliers would do if consumers were to behave that way.</p>
<p>Suppose that you make little ceramic models of caribou that some people think are adorable and want to buy from you. And suppose that they take you 20 minutes each and the clay you use costs $0.71 per figure, and that you already have whatever sculpting tools you need.</p>
<p>If they offer you $4.95 per figure, that means that you’re making a profit of $4.24 per figure and $12.72 per hour. How many hours would you be willing to work if you were earning $12.72 an hour?</p>
<p>If they offer you $49.95 per figure, that means that you’re making a profit of $49.24 per figure and $147.72 an hour. How many hours would you be willing to work if you were being paid $147.72 an hour?</p>
<p>Now, that’s a pretty dramatic example, but still, most people would be willing to work a little longer – depending on how badly they need the money – for $13.72 an hour than they would for $12.72. They don’t ordinarily work every day/week/month/year until they reach some predetermined amount and then stop, which is what your model suggests that they do.</p>