Supply and Demand

supply and demand, in classical economics, factors that are said to determine price, by correlating the amount of a given commodity producers hope to sell at a certain price (supply), and the amount of that commodity that consumers are willing to purchase (demand). Supply refers to the varying amounts of a good that producers will supply at different prices; in general, a higher price yields a greater supply. Demand refers to the quantity of a good that is demanded by consumers at any given price. According to the law of demand, demand decreases as the price rises. In a perfectly competitive economy, the combination of the upward-sloping supply curve and the downward-sloping demand curve yields a supply and demand schedule that, at the intersection of the two curves, reveals the equilibrium price of an item. Theories of supply and demand had their roots in the early 20th cent. theories of Alfred Marshall, which recognized the role of consumers in determining prices, rather than taking the classical approach of focusing exclusively on the cost for the producer as a determinant. Marshall's work brought together classical supply theory with more recent developments concentrating on the utility of a commodity to the consumer (see value). More recent theories, such as indifference-curve analysis and revealed preference, offer more flexibility to the supply and demand theories created by proponents of marginal utility. The theory of elasticity is significant as well: it shows how certain commodities will bear a substantial rise in price if there is not an equitable substitute available, while other easily replaceable commodities cannot do so without losing business to competitors. See also competition.

See L. Klein, The Economics of Supply and Demand (1983); K. Cuthbertson, The Supply and Demand for Money (1985).

The Columbia Encyclopedia, 6th ed. Copyright© 2014, The Columbia University Press.

Supply and Demand: Selected full-text books and articles

Understanding Capitalism: Competition, Command, and Change By Samuel Bowles; Richard Edwards; Frank Roosevelt Oxford University Press, 2005 (3rd edition)
Librarian’s tip: Chap. 8 "Supply and Demand: How Markets Work"
FREE! Supply and Demand By Hubert D. Henderson Harcourt, Brace, 1922
Market and Society: Two Theoretical Frameworks By Milan Zafirovski Praeger, 2003
Librarian’s tip: "The Law of Supply and Demand" begins on p. 161
Classics and Moderns in Economics: Essays on Nineteenth and Twentieth Century Economic Thought By Peter Groenewegen Routledge, vol.1, 2003
Librarian’s tip: Chap. 3 "A Note on the Origin of the Phrase 'Supply and Demand'"
Economics for Business and Management By K. Alec Chrystal; Richard G. Lipsey Oxford University Press, 1997
Librarian’s tip: Chap. 2 "Demand, Supply, and Price;" Chap. 3 "Elasticity of Demand and Supply"
The Law of Supply and Demand By Kirzner, Israel M Ideas on Liberty, Vol. 50, No. 1, January 2000
Israel Kirzner on Supply and Demand By Ahiakpor, James C. W Ideas on Liberty, Vol. 50, No. 7, July 2000
Dilemmas in Economic Theory: Persisting Foundational Problems of Microeconomics By Michael Mandler Oxford University Press, 1999
Librarian’s tip: Discussion of supply and demand begins on p. 69
Economics, a New Introduction By Hugh Stretton UNSW Press, 1999
Librarian’s tip: Part Three "Demands for Goods and Services"
Basic Economics: A Citizen's Guide to the Economy By Thomas Sowell Basic Books, 2000
Librarian’s tip: Discussion of supply and demand begins on p. 16
The Flawed Foundations of General Equilibrium Theory: Critical Essays on Economic Theory By Frank Ackerman; Alejandro Nadal; Carlo Benetti; Kevin P. Gallagher; Carlos Salas Routledge, 2004
Librarian’s tip: Chap. 4 "The Law of Supply and Demand in the Proof of Existence of General Competitive Equilibrium"
The Aggregate Demand/supply Model: A Premature Requiem? By Truett, Lila J.; Truett, Dale B American Economist, Vol. 42, No. 1, Spring 1998
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
Demand and Supply Curves: Rotations versus Shifts By Graves, Philip E.; Sexton, Robert L Atlantic Economic Journal, Vol. 34, No. 3, September 2006
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
'Supply Creates Its Own Demand': A Discussion of the Origins of the Phrase and of Its Adequacy as an Interpretation of Say's Law of Markets By Kates, Steven History of Economics Review, Vol. 41, Winter 2005
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
Mountifort Longfield's Supply-and-Demand Theory of Price and Its Place in the Development of British Economic Theory By Moss, Laurence S The American Journal of Economics and Sociology, Vol. 69, No. 1, January 2010
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
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