Supply and demand

Supply and demand (1 min 21 s)

Added on November 21, 2013

Description

Factors that influence the prices of consumer goods.

  

Supply and demand (1 min 21 s)

Added on November 21, 2013 | Desjardins Group

Gabriel never stops. In the summer he plays soccer, and in the winter he skates.

When he goes to his favourite sports store, he notices that prices vary; for example, skates are much cheaper in summer than they are in winter.

He wonders what influences the price of goods—aside from the cost of materials and labour. The principle of supply and demand is the answer. Supply is the number of products available for sale, such as the number of skates in the store, for example. Demand is the number of products that consumers want to buy or the number of people who want the same skates.

“What?”

In fact, the more popular and rare a product is, the more expensive it is. Let's stay with our skates example.

Since winter is the season to go skating, skates are more popular.

That's why prices go up.

In the summer, skates are less in demand. That's why prices go down.

This means that products are usually on sale either because they are not very popular or because there are lots of them.

But the seasons are not the only factor that can increase prices. Advertising, fashion and the novelty of a product also come into play.

Gabriel is a smart cookie. He now knows what he should consider in order to make the right decisions when he is shopping.