Introduction
Market dynamics are intriguing, and understanding the forces that drive demand and supply curves is critical to comprehending the overall economic picture. As previously stated, different non-own-product pricing variables might influence the demand curve, whereas technical improvements and input prices can affect the supply curve. I discovered two intriguing instances of a change in a particular product’s demand and supply curves.
Supply Side Shift
One article examined the influence of technology improvements on the supply of electric automobiles (EVs). Historically, due to the high cost and inefficiency of battery technology, the manufacturing of EVs was limited. However, because of recent advances in battery design and manufacturing techniques, the production cost of EVs has been greatly reduced (Alpert et al., 2018). This advancement in technology has resulted in an outward shift in the supply curve for EVs. Manufacturers may now create more EVs at the same price point, increasing market supply. This is a clear example of a supply curve change caused by a non-own pricing element, namely technical developments.
Demand Side Shift
Another study emphasized the impact of cultural influences on the desire for organic goods. As worldwide awareness of environmental sustainability and health has expanded, a cultural shift toward organic and sustainably produced foods has occurred. This shift in consumer preferences and tastes has resulted in a rise in demand for organic goods, causing the demand curve to move to the right (Sharda et al., 2021). It’s not so much about the cost of organic goods as it is about the larger cultural and societal norms that influence consumer decisions.
Conclusion
Finally, it is critical to distinguish between movements along the curve and variations in the curve itself. Product price changes cause movements along the curve while all other variables remain constant. Changes in non-own pricing components, on the other hand, cause curve shifts. The examples from the readings emphasize the need to recognize these distinctions in order to make educated market judgments.
References
Alpert, A., Powell, D., & Pacula, R. L. (2018). Supply-Side Drug Policy in the Presence of Substitutes: Evidence from the Introduction of Abuse-Deterrent Opioids. American Economic Journal: Economic Policy, 10(4), 1–35. Web.
Sharda, S., Singh, M., & Sharma, K. (2021). Demand side management through load shifting in IoT based HEMS: Overview, challenges and opportunities. Sustainable Cities and Society, 65. Web.