Create a final report for the industry you selected detailing the impacts of the United States/China trade war. This report should address the following topics: major issues of the trade war;the Unite

Supply and Demand

Casidy Landry

Columbia Southern University

The economic trends and people’s preferences are some of the factors that determine the shifts and movements along the supply and demand curves. When a curve changes, this is known as a movement. Therefore, changes in prices and the quantity demanded of the product are a movement in the demand curve. In contrast, the curve shift happens where the quantity of goods and the supplied goods changes while the price remains constant. Guiso et al. (2017). 

A shift occurs when the price remains the same despite changes in goods produced and those required in the market. For example, if a Pepsi drink costs $3 and the number of drinks required in the market increases, there will be more demand. Hence the customers are willing to buy more products despite the prices being the same.

The movement of the curve is caused by either the quantity demanded or changes in prices. Hence, when the prices are higher, the quantity demanded will be low compared to when prices are lower. Additionally, when the quantity demanded is higher, the prices increase. For example, if a Smart TV price reduces from $300 to $250, more people will be willing to buy, which will increase the quantity demanded. However, the price moves from $300 to $400 people will not be willing to buy, reducing the demand.

Factors causing the shift in the demand curve include changes in taste, prices of substitutes, complementary goods process, fall of income for the consumers, and future expectations to prices to change. For example, during the current pandemic, people have lost jobs while others are getting underpaid; therefore, they are unwilling to purchase expensive products.

Equilibrium occurs when there is a balance between demand and supply, making the market prices remain constant. Hence, when goods and services are produced and supplied in excess, the cost goes down, increasing demand, while short supply leads to higher costs reducing the demand. Therefore, for equilibrium to be achieved, supply and demand should be at the same point.

The equilibrium prices are more likely to fall when there is a demand reduction, reducing the quantity supplied. However, when the supply increases while other factors remain constant, the equilibrium price falls and vice versa. Hence when the supply shifts to either left or right, the equilibrium quantity will either increase or decrease. Buchanan, (1968). 

There is a direct relationship between the customer’s income and the demand levels. My company choice is Pepsi; however, Pepsi supply has steady supply and demand currently globally. However, if the prices increase, we expect customers to shift to other beverage companies like Coca-Cola. Therefore, Pepsi understands the competition from these companies strives to have relatively lower prices and uses state-of-art production technology to reduce wastage.

The main factor that would cause the supply to shift for Pepsi is the production technology; companies are currently attempting to develop products with minimum wastage and using resources available maximally. Due to robotic engineering, companies like Pepsi deliver authentic and high-quality products with less human interaction. Furthermore, there are automated selling machines at the selling points where one inserts their coins, and Pepsi beverage is dispensed. This reduces the overall production process and the third parties or brokers in the supply process, ensuring that the prices are relatively low. Therefore, this has caused a shift in the supply curve.

One of the major causes of the shift in the Pepsi demand curve is the changes in taste and preferences. Pepsi has been struggling to develop the best tastes at a relatively lower price. For example, we have sugar-free Pepsi drinks for diabetic people. Furthermore, Pepsi has various drinks that customers can choose from based on their preferred tastes, including Pepsi max, Pepsi true, diet Pepsi, Pepsi next, and Pepsi one. Krichene, (2002).

References

Guiso, L., Herrera, H., Morelli, M., & Sonno, T. (2017). Demand and supply of populism. London, UK: Centre for Economic Policy Research. ftp://ftp.igier.unibocconi.it/wp/2017/610.pdf

Buchanan, J. M. (1968). The demand and supply of public goods (Vol. 5). Chicago: Rand McNally. https://pdfs.semanticscholar.org/c952/80a08f8d2aa4a8d0233ec4b21d506f4dc71f.pdf

Krichene, N. (2002). World crude oil and natural gas: a demand and supply model. Energy Economics, 24(6), 557-576. https://www.sciencedirect.com/science/article/pii/S0140988302000610