Law of Demand, Law of Supply, and the Price Elasticity of Demand

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The Law of Demand, the Law of Supply, and the Price Elasticity
Introduction
It is essential for the management to have an insight on the demand and supply in the market to implement a price that is highly competitive. The price implemented by the management is required to offer value to the consumers requiring the cost of products and services to consider the performance of the industry. The buyers and sellers transact to come up with the required price used by an organization for a sustainable performance in the market (Dolan). The demand and supply analysis provides the consumer with an insight of the amount of commodities to purchase with a particular amount of income.
The Law of Demand
The law of demand is that the higher the price, the lower the demand and the lower the price, the higher the demand (Bowen, William & Julie Ann Sosa). The consumers tend to purchase more commodities when there is a reduced price for the products to ensure that there is an improved value of their income. The disposable income is the money that is used by the consumers to purchase products and service in the market. An increase in the disposable income for the consumers leads to the improved demand for commodities in the market. The consumers can purchase more commodities due to the increased disposable income to be used in the purchase of products and services to meet their needs. The producers are required to develop products with features and design that will highly attract a large number of consumers for a boost in demand. The opportunity cost is the products that the consumers are willing to forego due to the limited amount of income. The businesses are required to have an insight on the disposable income of targeted consumers to come up with a price that is accepted in the market.
The Law of Supply
The law of supply indicates that the higher the price, the higher the supply level in the market due to the possibility of maximizing profits (Economic Online). The business is required to perform an analysis of the past prices performance in the market in coming up with a price that will increase the commodity supplied in the market. The cost of production and the required return of the business is used in coming up with a price to the targeted consumers. The organizations are pleased to increase the commodity supplied to the market when the prices of products and services are high to ensure that there is increased profitability from the trade. The business is requir...