In these days when we have various investments that we can bet on in an attempt to make money without so much effort, you have probably heard about the law that determines much of the results we can obtain. We are talking about the Law of supply and demand .
In general terms, the Law of Supply and Demand is an economic principle that indicates that the price of an asset is either fixed when the quantity of supply and the quantity of demand are at an equilibrium point.
In other words, the Law of Supply and Demand establishes the relationship between the supply of a product or service in the market , and the demand that consumers have for it, being ideal, to call it in some way, that they are at that point of equilibrium.
Paying for a product
It is precisely there where you define how much consumers are willing to pay for that product, and the companies that produce it mark the profit they will obtain with each sale, once they have subtracted the costs of that series production.
Therefore, the Law of Supply and Demand is made up of two internal laws, precisely those of supply and demand, which manifest their own growth and decrease curves , which can follow a similar or opposite rhythm. It all depends on the circumstances.
Now, there is an important issue to take into account and that is that this law will continue to be valid as long as it remains adhered to the “ceteris paribus” principle, which indicates that the price should not be modified because, otherwise, everything that pass will be closely related to the phenomenon of inflation, and then no valid conclusions can be reached.
Among those conclusions we have that, whenever there is an increase in demand or a decrease in supply, consequently we should witness a rise in prices.
A clear example of this that we mention is when there are missing components for the manufacture of certain products , and given the lower supply of these in the market, their value grows to complement the cost of manufacturing them and, why not, taking advantage of the fact that the consumer will be willing to spend much more money, aware of how difficult it is to get that good or asset.
On the other hand, when a certain technology becomes fashionable, it is produced in series, and then the attraction of the public decreases, its remaining supply is generous, and that leads to a drop in price.
