Psychological Consumerism: Supply and Demand

This essay examines the psychological theory that underlies supply and demand economics. Even if we can only convey the concepts in their most basic form, it is clear that throughout time, consumer desires have shifted from a need to live to a need to impress others with their money. The process and structure Diamond Pest Control of trade were established by Adam Smith, the father of modern economics, in 1776, with the foresight that a global economic model would change the very fabric of people’s wealth and cause poverty to become a thing of the past. However, Adam Smith could not have predicted how the English Industrial Revolution and the Enlightenment would affect the psychology of goods for supply and demand. (First) The Wealth of the Nations (1776)

Introduction Demand:

In this case, I’ll use the apple as a perfect illustration of how the principle of Diamond Ltd London supply and demand can be understood in very basic terms. Primary market segments include those that can be grown or extracted from the ground (oil, diamonds); secondary market segments include those that alter the primary product’s form through assembly and manufacturing (steel piping, cars); and tertiary market segments include those that support our social systems of work and leisure time (insurance, travel agencies).

This straightforward system classification helps to categorise our workplace and the progression from basic processes to complex systems. Apples are thus a primary agricultural business because they were historically a natural food source and a source of essential vitamins for many parts of the world.Today, apples come in a range of sizes, colours, and forms that cater to the wants of the customer, i.e., people like you and me, thanks to the science of cross-fertilization. We’ll merely use the common domestic apple for our example, which may be eaten fresh from the tree or bought at the store.

Apples are a perishable item; they deteriorate with time. The emphasis during this time period will be on the price a customer is prepared to pay. Depending on market demand, apples that are crisp, attractive, and taste good may command a higher price.

However, as the product loses freshness over time and approaches spoilage, the price will drop to remove the apples from the market and make room for new, fresher ones. The price may be affected owing to the quality and reduced supply of apples available for sale if there is a poor harvest (caused by crop disease, unfavourable weather conditions for maximum output, or insect assault).

Demand

The price will be quite high if the product is still excellent but is now in limited supply due to great customer demand. On the other side, if the product has been ruined, the price may be very cheap to get rid of the inventory before it spoils further. Stocks may be purposefully destroyed in order to reduce supply and maintain an artificially high level of demand in the market in order to maintain the price at a high level (the typical market price).

(The oil business uses this strategy, reducing output to keep the price of oil steady overall.) Mountains of fresh goods were formerly purposefully kept off the market in the European Union, forcing customers to pay higher costs. The need for the product, its quality in comparison to comparable products (other apple varieties), its quality, freshness, and taste, and the elasticity of the price in relation to shelf life (how long it lasts in the supermarket before going bad) and consumer preferences are what ultimately drive market demand in the summer.

Supply has an impact on pricing because if there aren’t enough apples to meet everyone’s needs despite great demand, a higher price might be asked for their sale. However, if there is an excess of apples (a strong year for output) and there is little demand, the price may drop in an effort to move the fruit as fast as possible before it starts to spoil. (Again, providers may damage a portion of the crop or discard it in order to artificially maintain a supply that is less than the demand and maintain high prices.)

Effects of Import and Export:

International commerce implies that if my country is able to produce high-quality apples but your country is unable to, I can still sell my surplus output to that country and satisfy a need for an item that is not readily available there. In this environment, nations often exchange goods that are in demand in each country.

Oil is a necessary source of energy, but it isn’t always found naturally in other countries. Or, the demand for oil in first-world economies is so high that they can’t meet their own needs, so they have to import the energy from a country that has too much of it, or they stop their own people from using oil to make money to buy things that are needed for national security or war. Since they lack the resources or technology to do so, many developing countries with oil reserves must beg first-world countries to come and extract it.

Demand effects

In exchange, western oil firms may use oil as a medium of exchange for western consumer products that are in short supply in developing nations. Since we produce more apples than we can possibly eat domestically due to overproduction, our example of apples might be considered a product of trade for oil that we might require. Global businesses rely heavily on meeting demand in an international market and bringing money or commodities back home.

As a final point, duty is a type of taxation used in trade to protect domestic markets from the importation of cheap goods (often of poor quality), which would lead to job losses and the closure of domestic factories unable to compete on price, which might have been artificially fixed by foreign governments using their own tax revenue to support the trade abroad.

Countries like China extensively subsidise businesses in order to gain an unfair competitive advantage. As a result, they set low prices that push out competitors, allowing them to raise prices as the only provider of the required product. (2) 2012 International Trade Pages 15-31 Pugel T.Adam Smith believed in the Wealth of Nations that a free trade system without governments was the only way the markets could ever be ethical. Trade wars begin this way to safeguard domestic markets from unfair competition produced by governments. Smith A., 1776, page 164

Mentally unhealthy consumption

How can psychological thinking affect supply and demand in direct consumer behaviour throughout the whole spectrum of trade economics? Consumer behaviour as it relates to the psychological thinking processes that create a customer, like you and me, is one thing that economics can never anticipate.