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ECONOMIC SUPPLY & DEMAND

D-4388 1 ECONOMIC SUPPLY & DEMAND by Joseph Whelan Kamil Msefer Prepared for the MIT System Dynamics in Education Project Under the Supervision of Professor Jay W. Forrester January 14, 1996 Copyright 1994 by MIT Permission granted to copy for non-commercial educational purposes 5 D-4388 3 Table of Contents 1. ABSTRACT 4 2. INTRODUCTION3. CONVENTIONAL SUPPLY AND DEMAND INTRODUCTION 6 DEMAND 6 SUPPLY 8 INTERACTION BETWEEN SUPPLY AND DEMAND 9 4.

Willingness and ability to supply goods determine the seller’s actions. At higher prices, more of the commodity will be available to the buyers. This is because the suppliers will be able to maintain a profit despite the higher costs of production that may result from short-term expansion of their capacity5.

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