What is supply and demand?
I
n economics there are certain factors that control the availability of and the
demand for a product. In particular, supply refers to the varying amounts of
a good producers supply at different prices. Simply put, a higher price yields a
greater supply. Demand refers to the quantity of a good demanded by con-
sumers at any given price; in general, the law of demand states that demand
decreases as the price rises. In an ideal world, the supply and demand would be
balanced.
Thus, the law of supply and demand predicts that the price level will move
toward the point that equalizes the quantities that are supplied and demanded.
Economists use charts and graphs to indicate price and quantity, showing the
lines of demand and supply, along with where there would be shortages and sur-
pluses. Where the supply and demand curves “meet,” balance is established.
There are also charts that show a shift in demand or supply, resulting in a new
supply-demand balance point.
Can there ever truly be a balance in supply and demand? As most people
know from the fluctuating prices of gas, food, and other staples—and thanks to
the ever-changing variables in the mix such as war and natural disasters—there
is rarely, if ever, a good balance between supply and demand.What is a stock marketor stock exchange?
The stock market (or stock exchange) is a way of providing companies a means of issu-
ing shares to people who want to invest in various companies; it provides a way of buy-
ing and selling those shares. Stocks, or the ownership investment in a corporation, is
represented by shares, which are claims on a company’s assets and earnings. Common
stock means the investor has voting rights in the company; preferred stock means
there are no voting privileges. Owners of preferred stock, however, have first claim not
only on the assets and earnings of the company over common stock, but also the divi-
dends are paid first to people who own these shares.How are some stock market financial indicatorscalculated?
There are numerous financial indicators associated with the stock market, and they all
have to do with mathematical calculations. Dividendsare taxable payments put forth
by a company’s board of directors and distributed to its shareholders. These moneys
come from the company’s current or retained earnings and are usually paid out every
quarter. They can be either in the form of a cash dividend (usually in check form),
390 stock dividend, or other property.