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essays on supply and demand

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... capital? What is pure rent?

According to the law of demand, when the demand for a good increases, the price of that good will increase as well. This is because as demand escalates, sellers are able to raise the prices of goods in response to heightened demand. Also, as demand increases, supply goes down as sellers hurry to increase production of desired goods.
There are certain goods that are classified as demand determined. In other words, they are goods with prices that are highly responsive to demand. If there is a rapid increase in the demand of these particular products, it is quite easy for sellers and distributors to increase or decrease the supply of the good in response to the demand. It is also quite easy for sellers and distributors to manipulate the price of these goods to create an artificial scarcity of a particular good when in demand, to drive up the price of this good or service. Or simply it might be quite easy for producers to raise prices quickly for demand determined goods in response to a perceived market increase in demand. An example of a demand determined good might be a popular, inexpensively produced toy that becomes fashionable to buy around Christmas time. Thus something ...

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