Are salaries determined by supply and demand

supply and demand


The principle of supply and demand is relatively simple, only providing goods and services when someone is willing to buy them.

The offer


As offer describes the amount of goods and services available on the market, whereas demand is only the intention of households and companies to purchase goods and services for money or other goods in exchange.


Demand


to ask regulate the equilibrium price in a free market economy, this occurs when supply and demand match. Every good and every service that has a price is usually scarce and therefore not available indefinitely. The price determines the value of a service, a good. If the price is too high, the demand for that good will automatically decrease, with the exception of luxury goods. They serve as status symbols, and demand can even increase here.


supply and demand


If the amount offered increases and the demand remains the same, the price of the commodity falls, e.g. if the harvest of apples is very high, more apple juice can be produced, but if the demand remains unchanged, more is produced than is bought, so the price of apple juice falls .

If, on the other hand, supply falls and demand remains the same, the price of the goods rises, e.g. if the apple harvest is very low due to early frost, the price for apple juice rises if demand remains the same.

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The article "Supply and Demand" is in the category: Microeconomics