Running Head: DEMAND AND SUPPLY OF PRODUCTS AND THEIR EFFECTS

Demand Supply of Products and their Effects

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Institutional Affiliation

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Factors influencing the demand and supply of my product

For this assignment, I will use apples as the product. I always like apples and hardly go

for a day without eating at least two apples. I do buy apples from the market and sometimes just

by the road as I head home, which has become a norm. However, there are notable things that I

have realized concerning the demand and supply of these apples. Often, there are instances when

I do buy more than 5 lb. of smaller apples and about 7 lb. if the apples are larger and then store

them in my fridge to avoid buying apples every time I am out. Sometimes I only buy 1 lb. of

smaller apples for two or three days. Occasionally I do find apples by the road, and even at the

market, they are not as much. I have tracked these variations and recognized that there are

contributing factors, including personal (consumer) and market factors that influence the demand

and supply of apples (Barzilai, 2016).

Firstly, consumer factors include preferences and taste and levels of income (Barzilai,

2016). Whenever I had enough money (by enough money, I mean the money that remains after

satisfying other needs deemed priority), I could buy as many as 10lb of larger apples and end up

eating all of them in less than a week. In other words, my income level or the amount of money I

have dictates how many pounds of apples I buy. Besides, though I do like apples, sometimes I

prefer other fruits to apples such that I will only buy 1 lb. of smaller apples and use the rest of the

money to purchase other fruit instead. There were days that my taste for apples had changed to

the extent that I went for a week without buying or taking an apple. When tastes and preference

increase, I buy more than 2 lb. of apples a day, and this was somehow seasonal according to how

most apple sellers explain the scenario. Thus, an increase in taste and preference and income

levels of customers lead to a rise in demand for ample. When apple seller notices this increase in
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demand for apples, they as well bring more apples to the market, showing that consumer factors

that affect demand for apples consequently affect the supply of apples.

Besides, I noticed a similar trend with the market factors, including the prices of apples

per pound, competition, taxes, increase in the production of apples, among other factors

(Barzilai, 2016). I was often discouraged from buying 1 lb. of apples at two dollars and would

opt for a cheaper fruit such as bananas at 0.4$ per pound. If I had to buy them, possibly because

of preference and taste, I would buy fewer apples. Most apple sellers cited that weather, decrease

in production, increase in taxes, increase in the number of competitors were some other factors

that made them raise prices for a pound of apple and supply fewer apples. Besides many that I

interacted with as a loyal customer said, this is a survival tactic they employ to avoid losses

linked to wastage as most customers tend to buy less when prices hike, thus leaving vendors with

apples that depreciate with time. A decrease in production implies that farmers are harvesting

fewer apples meaning that there will be less in the market. During this time, sellers will acquire

apples at higher prices, consequently leading to an increase in apple prices to consumers. Most

consumers react to a rise in prices of products by shunning away, looking for a competitor who

may be cheaper or a substitute product leading to a decrease in demand. The supply of apples

often increases when farmers produce more apples, particularly during the end of spring.

How these factors affected the equilibrium price of the product

These increase and decrease in demand and supply of apples affected the prices of apple

in the market. For instance, when farmers produced more apples, there was a surge in supply,

which led to many apples in the market while the demand for apples remained the same; thus,

sellers lowered the prices of apples to increase sales and profitability. However, sometimes

demand for apples hiked while apples were hardly enough in the market (low supply) compelling
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seller to increase prices of apples. The law of supply and demand is the model that illustrates

how supply relates to demand and how this relationship impacts the prices of service and goods

(Inoua & Smith, 2020). Often when the supply of a product increases beyond the demand for that

product, its price will fall. Besides, when demand for a product rises beyond its supply, its prices

increase, as seen with the price of apples.

The supply and price of products conform to an inverse relationship when demand

remains constant (Inoua & Smith, 2020). The price felt to a lower equilibrium price when the

supply of apples increased while their demand remained unchanged, which showed a higher

equilibrium quantity of apples. Besides, a decrease in the supply of apples while the demand

remained constant led to a rise in their price of apples above the equilibrium prices and a lower

equilibrium quantity of apples in the market. This inverse relationship was similar to the demand

for apples. Nevertheless, a constant increase in demand for apples while supply is constant led to

the higher equilibrium price. When either a demand or supply of apples increased or decreased,

they either fell or rose until the equilibrium price was achieved.

Anticipate changes in demand and supply of the product

The demand for apple has slightly fallen while the supply remained the same following

the pandemic, which has seen consumers use a significant part of income on basic needs and

cheaper substitute. I anticipate that the demand will continue to fall soon as supply increase

because often apples blossom in late spring in a better part of the United States. So, possibly

from May, there will be more apples because most apple plants are not affected by the pandemic.

However, due to COVID 19 that has tampered with the economy, and consumers’ income levels,

most people are less likely to buy apples (use the money for other pressing basic needs or go for

cheaper substitute) which will result in fall in demand for apples.

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References

Barzilai, J. (2016). Supply and Demand Equilibrium and Debreu’s Theory of Value.

Inoua, S. M., & Smith, V. L. (2020). The Classical Theory of Supply and Demand.