Supply and Demand are Market Economy

Question: Discuss about the Supply and Demand are Market Economy. Answer: Introduction Supply and demand are considered as the backbone of the market economy as well as the major primary concepts of economics. Demand describes the total amount of a commodity as well as services that are desired by purchasers. It also demotes the total amount of the commodity that all the purchasers are willing to purchase at a certain price. On the other hand, supply describes the total amount of a product that are offered by the market. It also denotes the amount of a certain commodity that certain producers are willing to supply (Bowen and Sosa 2014). According to the law of demand, if all the factors remain constant, the more the price of a good the individuals will demand the less. On the other hand, if the price of good decreases, the individuals will demand more. Similarly, the law of supply denotes the total quantity of a commodity that are sold at a certain price (Kannai and Selden 2014). Discussion According to the Sydney Morning Herald, Supermarkets in Australia struggles to meet demand for brand label milk. Dairy farmers are facing the problem related to fall in prices since Coles. During the face of decreasing global prices, the two biggest dairy processors in Australia cut the price they desired to pay to the farmers for milk. As a result, a social media platform arranged campaign that called for customers in order to support the farmers by purchasing more milk, yoghurt as well as cheese and the individuals were also requested to purchase branded products instead of home brand goods from the supermarkets. According to the president of Australian Dairy Farmers, she did not encourage boycotting certain brands however; she desired to see individuals purchasing branded products (Lawrence and Dixon 2015). There are noteworthy changes taking place in the economic growth rate as well as the domestic policies of the trading partners that is likely to affect the demand for agricultural products in Australia. The demand for agricultural products in Australia is mostly influenced by outbreaks in the food safety and more wide-ranging concerns of customers over chemicals used during the production procedure. Worldwide diets are becoming increasingly harmonized that in turn forced governments to focus on manufacturing as well as importing agricultural products that were previously consumed by only Western societies (Qureshi, Hanjra and Ward 2013). In order to reach the export target set by the government, the farmers of Australia requires to improve their productivity as well as competitiveness in the international market. The growing population in Australia is likely to get coupled with rising per capita consumption that will in turn put an increased pressure on the domestic food system. On the other hand, the aging population in Australia will increasingly have an effect on both food consumption prototypes and total demand. The increasing ethnicity in Australia is likely to drive demand for imported food commodities (Marinoni et al. 2012). The factors other than price that affects demand includes tastes and preferences of the customers, income of the people as well as the number of individuals in the market. Tastes and preferences is regarded is one of the most imperative determinant that affects demand. The demand will be more for those products, the tastes and preferences for which will be grater. As a result, the demand curve for such products lies at a higher level. The demand for several goods changes due to change in fashion. Income of the people also determines their demand because if the income of the people increases, their demand for goods will increase. The greater income indicates greater purchasing power. In other words, if the income of the people increases they will be able to afford more. If the commodity is a normal good, then the increase in income will lead to increase in demand. However, if the commodity is an inferior good, then an increase in income diminishes the demand. The market demand for a g ood is obtained by adding up the demand of the individuals at several possible prices (Bohi 2013). The factor other than price that affects supply includes technology, transport condition as well as policies of the government. Technology is considered as one of the most important determinants for supply as an enhanced and better technology leads to increase in the production of a commodity that in turn leads to increase in supply. The supply of a commodity will also get decreased if the government incurs tax. In other words, the increase in tax leads to increase in the cost of production that in turn lowers supply. Transport also acts as a constraint for supply of a commodity. If the products are not available at the specified time due to poor transport facility, it affects the supply for that product. Conclusion It can be concluded that the population in Australia is predominantly urban that is largely accountable for the augmented demand for suitable processed foods. At present, Australia upholds a trade surplus in the food processing and beverages sector. It can also be concluded that income of the people also determines their demand because if the income of the people increases, their demand for goods will increase. References Bohi, D.R., 2013.Analyzing demand behavior: a study of energy elasticities. Routledge. Bowen, W.G. and Sosa, J.A., 2014.Prospects for faculty in the arts and sciences: A study of factors affecting demand and supply, 1987 to 2012. Princeton University Press. Kannai, Y. and Selden, L., 2014. Violation of the Law of Demand.Economic Theory,55(1), pp.1-28. Lawrence, G. and Dixon, J., 2015. 11. 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