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Law of Supply and Demand

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As a manager, it is important to understand how economic principles, and specifically supply and demand, are a part of your everyday business decisions. Relate the concepts of the market equilibrating process to a real-world experience occuring in a free market.
-Law of demand and determinants of demand
-Law of supply and the determinants of supply
- Efficient Market Theory
- Surplus and shortage

Please use at least 2 academic research references.

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The Law of demand and its determinants

The Law of demand can be stated in this manner: When price of a product or service increases, quantity demanded for the product or service decreases. There is an inverse relationship between the price and quantity demanded, i.e., when one variable (price) increases, the other variable (quantity demanded) decreases and vice versa.

The determinants of demand are income, price of a complement, price of a substitute good, taste or preferences, expectation, income, and population.

A detailed discussion of this concept is found in Chapter 5, Determinants of Demand, website link: http://www2.palomar.edu/users/llee/chapc05.pdf.

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The solution is a discussion of the law of supply and demand. It contains references and materials discussing the concept.

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