In my gendernomics series, I reference supply and demand theory a lot, and will continue to do so in future posts, as it is my argument that many behaviors are linked to this basic economic function. To serve as a foundational post, I figured a deeper look at supply and demand was in order, even though many of us understand it intuitively. The fundamental variables considered in supply and demand are quantity and price for two different variables. The quantity is normally displayed on the horizontal axis, and the price on the vertical axis, the intersections between these two variables on the Cartesian plane, form a curve. A supply and demand graph is usually built to cover a single product, but they can also cover entire sectors or groups of products if the data is comparable.
The Demand curve is usually downward sloping, meaning that as price goes up, demand goes down. This is a result of a few different things, but primarily that fewer people have the funds to make a purchase, or they elect to buy substitute products.
The Supply curve is usually upwards sloping, meaning that as price goes up, supply goes up. This is due to the fact that more suppliers of a good will be willing to supply it if it commands a higher price, due to higher margins. It also tends to mean that producers who previously could not compete within the product area, will become competitive.