Explain What Is Meant By The T

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than the choice of the individual, as this varies and is difficult to surmise and predict.
A market is a place where buyers and sellers communicate for the purpose of the exchange of a good. In free market, the price of a good can fluctuate, determined by supply and demand.
When economists discuss demand, they mean effective demand, or how much people will want, and can afford to buy at any given price of a product. This means that demand is dependent on price. The graph above is a demand curve that illustrates that as price rises, demand falls. This enables movement along the curve, which we term an expansion or contraction of demand, depending on the direction of this movement. Like most economic models, it is simplified and assumes ceteris paribus that price and demand have an inversely proportional relationship. This theory does not account for goods which are nesscessities or that have few close substitutes, for whom demand may remain constant with price changes.
Similarly, ...

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demand for some goods as you have to pay more to pay off a good brought on credit when interest rates are high.
The size and structure of the population can affect demand. The demographic time bomb occurring presently may mean that future production is geared towards goods that old people have more use of. How income and wealth is distributed in society can affect demand, poor people have a need for different goods than those of the wealthy.
The factors influencing supply are less obvious, as we are mainly consumers. Costs of production are influent, for example, if they rise due to interest rates the profit margin is reduced and some firms may have to leave the market, decreasing ...

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