Analysis of the situation of market equilibrium, surplus and

Interaction of supply and demand.

The main factor in changes in supply and demand is price. Sellers and buyers, focusing on prices, develop plans for their behavior, and in accordance with them make their decisions about buying and selling goods. However, when they meet on the market, it turns out that as a result of coordination, supply and demand can change their price and lead it to a compromise agreement, i.e. to the market price.

Market price – this is the price of a compromise, an agreement between the seller and the buyer, the price, at which the product is actually bought and sold. Market price is also called at the cost of balance, since it is at that level of equilibrium when the seller still agrees to sell, and the buyer already agrees to buy the product.

In the process of interaction between sellers and buyers, it is possible three options for market equilibrium:

1. Supply of goods exceeds customer demand. This situation may result from:

· excess production of goods;

· their quality is not high;

· exorbitantly high prices for them, which have come up against the low purchasing power of buyers. The resulting discrepancy, as a rule, leads to crisis situations. The solution to this problem could be: lowering prices, reducing production volumes, improving the quality of products, improving distribution relations and regulating income.

2. Demand exceeds supply . Unsatisfied consumer demand is the result of exorbitant price increases. People are looking for an application for their money. As a result, intense competition arises between buyers for the right to purchase missing goods. Prices for goods are rising. In this fight, those buyers who have higher incomes win.

3. Equilibrium of supply and demand . It characterizes the general and particular correspondence between the volume and structure of demand for goods, on the one hand, and the volume and structure of supply, on the other, as a result of which they are balanced.

The created equilibrium indicates that the market offers so many goods and in such an assortment that fully satisfy demand and are available to the buyer at the prices offered. But, as a rule, such correspondence is practically rare. Manufacturers usually differentiate goods by offering them for sale at different prices, based on different levels of purchasing power, so for the same product in the sales market there are as many points of balance between supply and demand as there are correspondences between them.

To establish the market price, we combine the previously discussed demand (Fig. 6.1.1.) and supply (Fig. 6.2.1.) schedules. Both of these graphs depict in each case the quantity of goods depending on the price level (Fig. 6.3.1.).

The level of intersection of the supply and demand curves (point A) determines the level of the market price. Point A is called the equilibrium point, and the price (F) is called the equilibrium point. This is truly a balancing price, because any other point of intersection of the curves means a disproportion between effective demand and the corresponding supply of goods.

If market the price will fall below the equilibrium , will decrease to level (K), then the number of buyers will increase at the expense of those individuals who were unable to reach the price at the level of point F. Consequently, the quantity of demand will also increase (before OE). But a decrease in the market price (from F to K) will reduce the number of sellers at the expense of those for whom this price is unacceptable, since it does not even reimburse costs.

6.3.1. Equilibrium price.

As a result increased demand (OE) will be opposed by a much smaller supply of goods (OL). Arises commodity shortage (in Fig. 4 it is equal to segment LE).

When under the influence of demand, the market price will increase equilibrium and rises to level (R), then the number of sellers will increase at the expense of those who have high costs. Hence, the quantity of supply will also increase(DE will be added to OD). But now the increase in market price (from F to R ) will reduce the number of buyers (from OD to OL) at the expense of those for whom this price will become unaffordable. As a result, the increased supply (OE) will be opposed by a much smaller solvent number of buyers (OL). Overproduction occurs , surplus of goods (in Fig. 6.3.1 it is equal to the segment LE).

Thus, equilibrium price is the price at which the quantity demanded coincides with the quantity supplied. If the price rises above the equilibrium point, it will stimulate an increase in production, which will lead to an increase in commodity supply and the price of goods will begin to decline, approaching the equilibrium point. A decrease in price, in turn, increasing consumer demand, will contribute to the expansion of production and a return to the equilibrium point.

Thus, in the market there is a competitive struggle between the seller and the buyer for a price that is more favorable to each of them. As a result of this struggle, the price is balanced, i.e. fixed at a point where the interests of the buyer and the interests of the seller coincide.

It should be noted that the movement of the equilibrium price up or down, i.e. upward or downward, directly affects the well-being of various population groups. Therefore, sometimes the state tries to intervene in the process of market pricing using administrative methods, which most often comes down to setting prices at a level below market equilibrium. As practice shows, through government intervention in the pricing mechanism it has not yet been possible to solve a single problem, both in the economic and social spheres. State control over prices leads to artificial regulation of supply and demand. Setting prices for goods below the equilibrium price creates a market environment that is unfavorable for the producer: the production of goods is low-profit or unprofitable. A commodity shortage arises, and, as a result, goods go into the shadow economy, where their prices are not only higher than the state ones, but also higher than the equilibrium price. Moreover, the turnover of such goods does not allow them to be taxed, and this entails a reduction in state revenues. In the conditions of such management, low-income strata of society are not only not protected by the state, but are even further drawn into the quagmire of economic turmoil: shadow goods become inaccessible to them, and the shortage of essential goods generally gives rise to an ugly system of distribution of material goods with the help of cards, coupons, coupons, etc. .P. The budget deficit due to the concealment of income by shadow structures further increases the social insecurity of those whom the state is supposed to protect.

Demand(D, demand) is the desire and ability of buyers (consumers) to purchase goods or services. Distinguish between individual and market. The demand of an individual consumer in the market is called individual. Market demand is the sum of the individual demands of all consumers of a given product. Quantity of demand shows the relationship between a given price and the quantity of the product being purchased. The relationship between the concepts of “demand” and “quantity of demand” is clearly shown by the graph of the demand curve (Fig. 3-2).

If we plot all possible quantities of the purchased product along the x-axis, and all possible price options for it along the ordinate axis, we obtain a demand curve - D0, as a set of points that expresses all possible combinations of prices and quantities of the purchased product in a given period. Each point on the demand curve shows a certain quantity demanded, that is, the amount of a good that buyers are willing and able to buy at a given price. All other things being equal, a decrease in price causes an increase in the quantity demanded of a product, and vice versa. Law of Demand expresses the inverse relationship between the price of a product and the quantity demanded for it.

The relationship between the quantity demanded of a good and its price can be explained by the income effect and the substitution effect. Income effect consists in the fact that when the price decreases (which is equivalent to an increase in income), the product becomes cheaper relative to the total amount of income and therefore it can be bought in larger quantities without denying oneself the purchase of other goods. Substitution effect means that when the price decreases, there is an incentive to buy this product instead of similar others, which have become relatively more expensive (if beef has fallen in price, then the demand for lamb, pork, fish, poultry will decrease, since they will begin to purchase more beef). The income effect and the substitution effect determine the downward sloping nature of the demand curve, i.e., as the price decreases, the quantity demanded increases.

In addition to the price of a given product, demand is affected by others, non-price factors, which characterize the consumers of this product. Non-price factors of demand include consumer tastes and preferences, the number of consumers in the market, income, prices for other goods, consumer expectations. Non-price factors change demand, increasing or decreasing it. This means that at the same price of a product, buyers are willing to buy more or less of it, or that they are willing to buy the same quantity of a product at a higher (lower) price. The change in demand on the graph is expressed as shift demand curve: with increasing demand - up and to the right, from D 0 to D 1 , and when demand decreases, down and to the left, from D 0 to D 2 (Fig. 3-2).

Rice. 3-2. Demand curves

Let us consider in more detail the influence of consumer income and prices of other goods on demand. Changes in consumer income affect demand, but the direction of change depends on the product category. In highly developed countries there are normal goods, consumed by the bulk of the population, and low category goods, intended for the poor and low-income.

The relationship between changes in demand for goods of normal quality (for example, a new car, vacation expenses) and changes in income is direct, but in the case of goods of the lowest category it is inverse. As income increases, demand for them decreases, and vice versa.

Prices for other goods, influencing consumer behavior, also change demand. The direction of change depends on the type of product, whether it is complementary or interchangeable. Complementary (related) goods - These are goods that are consumed together. The relationship between the demand for a given product and the price of the associated product is inverse. If, for example, the prices of VCRs rise sharply, then the demand for video cassettes will fall.

Fungible goods can be used in place of one another. The relationship between a change in the price of an interchangeable product and a change in demand for this product is direct. If the price of poultry falls, then, other things being equal, the demand for beef will decrease.

Supply, factors influencing it. Law of supply.

Offer(S, supply) shows the desire and ability of producers-sellers to supply goods or services to the market at any of the possible prices in a given period of time. Just as in the case of demand, it is necessary to distinguish between the concepts of “individual supply” and “market supply”, “supply” and “quantity of supply”. Supply quantity shows the relationship between a given price and a given quantity supplied.

If the quantity of demand is inversely related to the yen of a product, then there is a direct relationship between the price and the quantity of supply: if the price rises, then, other things being equal, more of this product will enter the market, since it is profitable for the manufacturer to increase its production and vice versa. Law of supply expresses the direct relationship between price and quantity supplied of a product.

The supply curve S 0 on the graph (Fig. 3-3) shows all possible combinations of prices and quantities of goods supplied, all other things being equal. According to the law of supply, it has an ascending character.

Rice. 3-3. Supply curves

In addition to the price of a given product, the supply is influenced by the following non-price factors:

1) prices for resources, the relationship between prices for resources and supply is direct. A decrease in prices for resources will reduce the cost of producing a unit of goods (average costs), so for producers the supply of this product to the market will become profitable and supply will increase. Rising prices for resources, increasing production costs, reduces the supply of goods;

2) production technology. The introduction of advanced technologies, reducing average production costs, increases supply;

3) taxes and subsidies. High taxes reduce supply, and subsidies and preferential loans, if used effectively, can stimulate the growth of production and supply;

4) number of producers. There is a direct relationship between the number of sellers and supply in the market;

5) price expectations of sellers also influence supply. If prices for a given product are expected to increase, then producers will hold it at the moment and vice versa. The change in supply under the influence of non-price factors, among which the change in average production costs (resource prices, economics of production, taxes and benefits) is of decisive importance, is shown in Fig. 3-3. An increase in supply leads to a downward shift to the left of the supply curve from S 0 to S 1 and a decrease in supply leads to a shift to the right, upward from S 0 to S 2 .

Elasticity of supply and demand.

The degree of sensitivity of demand (or supply) for a product to changes in its price is called elasticity of demand(offers). It varies from product to product and can be measured using the elasticity coefficient.

Elasticity coefficient(E - elasticity) shows by what percentage the quantity demanded (or supplied) for a given product changes when its price changes by one percent.

If this ratio is greater than one, demand is considered elastic, if less than one, demand is considered inelastic. With unit elasticity of demand, Ed is equal to one. If a change in price does not change the quantity demanded at all, then completely inelastic demand occurs. When, at a constant price, the quantity demanded constantly increases, perfect elasticity of demand is observed.

Different options for elasticity of demand can be represented in traffic (Fig. 3-4). Curve A shows inelastic demand, curve B shows unit elasticity, and curve C shows elastic demand. The elastic demand curve C is flatter than the inelastic demand line A. Moreover, any demand is more elastic in the area of ​​high prices and low volumes of demand and inelastic in the area of ​​low prices and large possible sales. (The horizontal straight line N represents perfectly elastic demand, and the vertical straight line M represents perfectly inelastic demand).

Rice. 3-4. Elasticity of demand

An example of inelastic (weakly elastic) demand is the demand for medicines, drugs, and many essential goods (for example, bread): no matter how the price of these goods changes, the demand for them changes little or does not change at all. Therefore, an increase in price leads to an increase in gross revenue - the product of price and sales volume, and vice versa (Fig. 3-5, A).

With unit elasticity of demand, a change in price does not lead to a change in revenue, since the decrease in price is compensated by the same increase in the sales volume of the product (Fig. 3-5, B). If the demand for a given product is elastic, that is, a small decrease in the price of a product causes a larger increase in the quantity demanded, then the firm will not lose from such a decrease and will ultimately receive more income. Consequently, with elastic demand, price and revenue change in opposite directions, and with inelastic demand - in the same direction (3-5, C).

The concept of elasticity is also applicable to the study of product supply. Changes in supply are determined by difficulties in redistributing resources between industries, which is associated with the time factor: supply is less elastic in the short term and more elastic over a long period, when it is possible to adapt to the changed market situation.

Rice. 3-5. The impact of demand elasticity on total revenue

The elasticity of demand for goods is important for practice; this issue is carefully studied and taken into account in the market strategy of any company.

ABSTRACT

in the discipline "Economic Theory"

on the topic "Supply and Demand"

1. Demand and factors influencing it. Law of Demand

Demand is an economic category that characterizes the need of buyers for a certain product, provided with sufficient means of payment, allowing them to purchase this product at a certain price in a given period of time in a certain market or in a certain country.

There is a distinction between individual and aggregate demand. Individual demand is the demand of a specific buyer for a specific product, and in a given market. Aggregate demand is the total amount demanded for goods and services in a country.

There is also a distinction between primary and secondary demand. Primary demand is the demand for a product or service of a certain category of goods as a whole. For example, this could be the demand for coffee or the demand for insurance services. Secondary (or selective) demand is the demand for goods of a certain brand or company and for services of a certain type.

In addition, demand can be negative, absent, hidden (potential), full, excessive, decreasing (falling), fluctuating, irrational, rush (avalanche).

Negative demand is demand that arises when consumers “dislike” a product and therefore avoid purchasing it. Missing demand is the demand for goods that are no longer needed in the market or are outdated. Latent demand is demand expected in the future, the demand of potential buyers. Full demand is the desired demand that exactly corresponds to the production capabilities and policies of the enterprise - the manufacturer of the product or service. Excessive demand is demand that exceeds the capabilities of the enterprise, when customers believe that the enterprise does not satisfy their solvent needs. Declining demand is demand that has a steady downward trend, demand for goods that are going out of fashion or that meet the needs of the market and consumers. Fluctuating demand is demand that changes over time, i.e. and depending on the season, month or even day of the week and time of day. Irrational demand is a demand that is undesirable from the moral point of view of society, for example the demand for drugs. rush demand is demand of a spontaneous nature, caused, for example, by a shortage of a product.

In addition to the concept of “demand”, it is also necessary to highlight the concept of “quantity of demand”, which means the maximum amount of a service or product that a consumer wants and can buy at a given price in a given period of time.

The amount of demand is influenced by a number of factors:

the price of the product offered;

quality characteristics of the product;

consumer income level;

changes in consumer incomes - usually an increase in consumer incomes leads to an increase in demand for goods, but not always;

changes in prices for substitute goods;

changes in prices for complementary goods;

changes in tastes, habits, fashion, preferences, needs, desires of consumers, most often associated with a temporary factor, i.e. consumer preferences and consumer expectations;

changes in the number of consumers in the market and demographic situation;

political factors;

socio-cultural factors;

market saturation;

general economic indicators - for example, the refinancing rate and interest rates on household deposits; if the rates are high, then the demand for goods may decrease due to the fact that people will prefer to accumulate money.

Demand behavior obeys the law of demand. As a rule, the most significant influence on demand is the price of a product or service. There is a certain connection between the price of a product and the quantity of the product demanded, which is reflected in the law of demand.

The law of demand states: all other things being equal (other factors influencing the quantity of demand are unchanged), the quantity of a good demanded increases as the price of this good decreases, and vice versa. Thus, the demand for goods is inversely related to price. The law of demand is based on the principles of diminishing marginal utility, the income effect, and the substitution effect.

2. Supply and factors influencing it. Law of supply

Supply is the quantity of goods presented on the market at a certain point in time at a certain price, i.e. the totality of goods that producers are willing and able to sell.

Supply, like demand, can be individual or aggregate. An individual offer is an offer from a specific manufacturer or an offer from a specific product in a given market. Aggregate supply is the total supply of all goods and services in a country.

Just as it is necessary to distinguish between the concepts of “demand” and “quantity of demand,” it is necessary to distinguish between the concepts of “supply” and “quantity of supply.” Quantity supplied is the maximum quantity of a good or service that sellers are able and willing to sell at a certain price in a certain market and at a certain time.

Factors influencing the quantity of supply can be divided into two large groups:

external factors, the influence of which does not depend on the activities of producers of goods and services:

socio-economic: consumer solvency; level of interest rates on deposits; demographic situation, etc.;

cultural and ethnic;

political: economic policy of the state, inflation rate, government subsidies and orders in a particular industry, etc.;

competition - in particular, the entry of new firms into the market or the release of new products;

the price of a product prevailing on the market.

internal factors, the influence of which can be controlled directly by producers of goods and services:

objectivity of marketing analysis of demand forecast for the enterprise’s products;

level of product competitiveness;

level of organization of the sales process and promotion of products to the market;

pricing policy of the enterprise;

the value of production costs.

The volume of supply for each specific manufacturer usually changes depending on the price of the product in the market. The dependence of supply on the price of goods is reflected in the law of supply.

The law of supply is that, other things being equal, as the price of a product increases, the volume of its supply on the market increases, and as the price decreases, supply decreases.

Thus, supply is directly dependent on price changes. If there is a low price on the market, then sellers will offer a small amount of goods, keep part of it in the enterprise’s warehouse until the price rises, and if the price is high, then they will offer the market a large volume of goods, since, firstly, sellers use reserve reserves when the price rises. or quickly introduced new capacities, and secondly, other manufacturers will rush into this industry (with a tendency to increase prices). In the short term, an increase in price is not always followed by an increase in supply, since it takes time to introduce reserves to increase production (available equipment, number of employees) and the transfer of capital from other industries. But in the long run, an increase in price is always followed by an increase in supply.

demand supply elasticity equilibrium price

3. Market equilibrium of supply and demand. Equilibrium price

Market equilibrium of supply and demand is the equality of supply and demand for a certain product at a certain time in a certain market, in other words, it is the coincidence of the plans of buyers and sellers at a certain price. Thus, market equilibrium depends on the matching of supply and demand. The following types of market equilibrium are distinguished:

stable - equilibrium, the fluctuations of which are insignificant and deviation from which leads to a return to the same state;

unstable - equilibrium, deviation from which does not lead to a return to the previous state;

instantaneous - equilibrium that is created in a situation if the demand for some product suddenly increased, but the supply remained the same;

short-term - equilibrium, which is created in a situation where the number of enterprises in a given market does not change, and supply increases slightly, but not for long;

long-term - equilibrium in which supply fully adapts to changed demand.

As a result of the interaction of supply and demand, the market price is established. If you draw graphs of changes in supply and demand depending on price, then the market price is fixed at the point of intersection of the demand and supply graphs. This point is called the equilibrium point, and the price is called the equilibrium price. The equilibrium price is the price at which the quantity demanded corresponds to the quantity supplied; it determines when the interests of the seller and the interests of the buyer reach agreement.

Other things being equal, the equilibrium price corresponds to the quantity of goods that buyers want to buy and sellers agree to sell, thus the equilibrium price has a balancing function. It reveals its influence both through demand with constant supply, and through supply with constant demand. If supply increases while demand remains constant, the equilibrium price will become lower as the quantity of goods sold increases. If supply decreases, a higher equilibrium price will be established with fewer sales of goods. Such changes in the equilibrium price occur under the influence of market mechanisms, but the market mechanism for establishing the equilibrium price may be hampered by administrative price regulation and the monopoly of the producer or consumer, which allows the monopoly price to be maintained.

Price, supply and demand.

Equilibrium in the market.

Demand and factors determining it.

The action of the market is determined by the functioning of the market mechanism. The main elements of the market mechanism are: demand, supply, market price and competition.

Demand is the desire and ability of consumers to buy a certain volume of goods.

The concept of demand is dual, since on the one hand there are various desires, and on the other hand there are opportunities provided by money. Hence the demand qualitative and quantitative side.

Quality side demand characterizes the dependence of demand on various needs and is influenced by factors such as climatic conditions, the existing social, national, religious environment and the general economic level of development of society.

Quantitative side demand is always connected with money, that is, with the payment capabilities of the population. Demand supported by the paying ability of the population is called effective demand .

The quantity of demand is influenced by the following factors: they can be price and non-price. The price factor is the price of the product. Non-price factors - consumer income, types and preferences of consumers, availability of substitute goods (substitutes), availability of complementary goods (compliment), number of buyers in a given market, buyer expectations (inflationary and scarcity).

Thus, demand is a multifactorial phenomenon, which is always supported by money. In the absence of payment opportunities, demand does not manifest itself as an element of the market mechanism.

There is a distinction between individual and market demand.

Individual demand – the demand of an individual buyer for a separate, specific product.

Market demand – the total demand of all buyers for a given product at a certain price.

Individual and market demand have an inverse relationship with price. There is a distinction between the dependence of demand on price and non-price factors.

The dependence of demand on price is described by the demand function.

Q d = f(P), Where Q d– volume of demand, P– price, f– demand function.

The demand function shows the quantity of goods that consumers are willing to buy at a given price level. The quantity of a good that consumers are willing to buy at a given price level is called the quantity demanded.

The demand curve is sloping towards the curve D and shows the inverse relationship between the volume of demand d from the price. In other words, the higher the price, the lower the quantity demanded, but as the price decreases, the quantity demanded increases. ( Rice. 1)

Rice. 1

The relationship in which the volume of demand (purchases) is inversely proportional to the level is called the law of demand. According to the law of demand, consumers, other things being equal, will buy more goods the lower their price. In this case, the relationship between price and volume, demand is direct, that is, as prices rise, the volume of demand also increases from Q 1 before Q 2 (Rice. 2)

Rice. 2

This situation occurs in three cases:

products are designed for rich people, for whom price does not matter much;

buyers judge a product by its price (the higher the price, the better the quality of the product);

the product is a Giffen good, that is, there is a single good that the population can buy at its extremely low income.

In business practice, the usual curve prevails, which is associated with the rational, effective behavior of the consumer, his full awareness of the price and nature of the product being purchased. When the demand curve changes, a graphical change in the demand curve occurs. It is necessary to distinguish between movement along the demand curve and movements of the demand curve itself. ( Rice. 3)

Movement along the demand curve means a change in the magnitude (volume) of demand caused by a change in the price factor. The action of non-price factors, that is, all the others, leads to a change in demand and a movement of the demand curve upward or downward.

For example, during the hot summer months, the demand for soft drinks and ice cream increases. In this case the curve D will shift to a new position, that is, to a curve D 1 , that is, to the right. And in the winter months, demand decreases, then the curve becomes D 2 . and if the average income of buyers increases, then, other things being equal, the curve D move to the right and to the same price level P 1 will correspond to the increased level Q 1 , as shown in the graph (P is. 3)

Rice. 3

Demand is characterized by the demand price. This is the maximum price that a consumer can pay when purchasing a given quantity of goods. It is determined by the amount of consumer income and remains fixed, since the buyer can no longer pay for the product, that is, the higher the demand price, the fewer goods will be sold. Thus, demand is one of the necessary elements of the market mechanism that characterizes human behavior.

Proposals and factors influencing it.

The second essential element of the market mechanism is supply. This is the desire and ability of producers (sellers) to supply the market with a certain amount of goods and services at a given price. Supply is the result of production and reflects the desires and capabilities of the manufacturer to produce and sell their goods.

Supply quantity - this is the maximum quantity of goods and services that producers (sellers) are able and willing to sell at a certain price in a certain place and at a certain time. The quantity supplied must always be determined over a specific period of time.

Supply factors can be price or non-price.

Price factors – the price of the product itself and the price of the resources used in the production of the product.

Non-price factors – this is the level of technology, production costs, the company’s goals, the amount of tax subsidies, prices for related goods, the expectations of producers, the number of producers of the product. Thus, supply is multifactorial; the factors that determine the amount of supply are also the motivation for entrepreneurial activity.

There is a distinction between the dependence of supply on price and non-price factors. This dependence is described by the function Q s = f (P) , Where Q s– volume of supply, P- price, f – function.

The relationship between supply and price is expressed in law of supply, the essence of which is as follows: the quantity of supply, other things being equal, changes in direct proportion to the change in price. The direct response of supply to price is explained by the fact that production responds quickly enough to any changes occurring in the market. When prices rise, commodity producers use reserve capacity or introduce new ones, which leads to an increase in supply. In addition, the presence of upward trends in prices attracts other producers to this industry, which further increases production and supply. It should be noted that in the short term, an increase in supply does not always immediately follow an increase in price. Everything depends on the available production reserves (availability of equipment, labor, etc.) since the expansion of capacity and the transfer of capital from other industries usually cannot be carried out in a short time. In the long run, an increase in supply almost always leads to an increase in price.

Supply curve ( Rice. 4)

Rice. 4

The supply curve determines the relationship between supply volume and price and shows the desire of producers to sell more goods at a high price.

The most important factor influencing the supply price is the price of the product. The income of sellers and producers depends on the level of market prices. Thus, the higher the price of a given product, the greater the supply and vice versa.

Offer price – the minimum price at which sellers agree to supply a given product to the market. The lower the supply price, the less goods will enter the market. At the same time, the number of producers cannot be infinitely large, since the market is saturated with goods.

The main reason for the reduction in supply is limited resources, that is, lack of raw materials, etc. Therefore, the market supply curve is the supply price curve, which reflects the value of production costs. The larger the production volume, the higher its costs. Thus, the supply curve shows more favorable conditions for the production and sale of products.

Changes to offers.

When a product changes, the corresponding point in the market situation moves along the supply curve, that is, the quantity of supply changes. Non-price factors influence changes in all functions of supply. ( Rice. 5)

As supply increases, the curve S 1 will move to a new position S 2 – that is, to the right, and when decreasing to the left - S 3 .

Economics today is quite closely connected with trade; the concept of a market, existing types of markets, how exactly their features affect development, and what opportunities are provided to participants are important to it. It also matters to what extent the market and the market mechanism are regulated by the state. How exactly does everything happen? To what extent? What defense mechanisms are there, if any?

Let us recall that a distinctive feature of a market economy is non-interference on the part of the government and power structures in general. This is declared in many modern countries, but what is it really?

In short, the beginning of the formation of the all-Russian market is precisely connected with the departure from the dictates of the state and the movement towards greater freedom. But historically there was no smooth growth as such. There was a rather sharp and painful breakthrough for many, which led to destabilization and the disappearance of guarantees. In the early 90s, the market for production factors (land, labor and capital) began to emerge again, but control was often very conditional. As a result, the all-Russian market at the first stage was characterized by extremes, chaos, and the penetration of criminal elements into power structures. All this gave rise to a feeling of danger and increased risk for ordinary participants.

At the same time, the essence of a market with a free economy was not familiar to most. Not everyone understood exactly how supply and demand are formed in practice in the land market, for example, what options and alternatives exist. This situation, without a qualitative study of the problem, often gives rise to a rollback in the desire for greater control.

As a result, the modern all-Russian market often suffers from government interference, the adoption of ill-conceived bills, etc. At the same time, it cannot be denied that the functions of the state imply, among other things, stabilizing the situation and studying what may be the cause of inflation. That is, it was impossible not to interfere at all. Another thing is how exactly the situation needs to be changed, how the functions of the state are implemented in general and locally.

For Russia, many types of markets have been and remain an unexplored concept. Some things have been studied in theory, for example, by representatives of certain professions in universities, but have not been mastered in practice. That is why when attempts appear to introduce new technologies and change the situation as a whole, slippage, mistakes, and problems begin that directly affect the emerging situation.

It is impossible to ignore the types of markets, the law of supply and demand, price and non-price factors of their formation, and the relationship between the concepts described above. Even if, for example, supply and demand in the capital market in Russia are subject to very large changes due to local specifics, you still need to understand how things should work in order to find out why this does not happen.