Demand & Supply Essay Example | Topics and Well Written Essays - 1250 words

Demand & Supply - Essay Example is because of the fact that there is lack of new houses in Scotland that would be ready for sale and hence the prices of the existing properties are going up. Along with the demand in the housing properties, the demand for housing rental is also increasing simultaneously. The essay looks into the different aspects of demand and supply of housing and how the prices change in responses to the changes in the demand for properties for residence. The first part of the essay makes a general discussion of the theories underlying the demand and supply for a commodity. The later part looks at the various aspects of the theories applied to this article under consideration. Relevant figures have been provided to support the essay. The quantity demanded is the amount of product that the consumers are willing to pay at the market determined price. The law of demand states that as the price of the products increase the demand for the products decreases and when the price of the product decreases the quantity demanded of the product increase, other things remaining constant (Samuelson and ‎ Nordhaus, 2010). This inverse relation between the price and the quantity demanded is shown with the help of the figure below. In the figure it can be seen that when the price of the product is P2 the quantity demanded is Q2. When the price of the product increases to P1 the quantity demanded reduces to Q1. On the other hand when the price decreases to P3 the quantity demanded increases to P3. This proves the inverse relationship. There are several factors that may affect the demand for the product. First of all, the changes in the price of the products may affect the demand for the product as demonstrated in the figure above. This would be a movement along the demand Secondly, if the income of the individuals increase there would be a shift of the demand curve outwards in the price quantity space. This means that the as the income of the individuals increase the quantity demanded would