A-Z Popular Blog Pricing Search »
Related Guides
Moral Hazard

Economic Problems

Economic Problems


Economic Theories

9 Examples of Supply And Demand

 , updated on
Supply is the amount of value that market participants are willing to provide to the market at a price level. Demand is the amount that market participants will buy at a given price.
In an efficient market, price and quantity occurs at the point where the supply curve meets the demand curve. This point is known as the equilibrium between supply and demand. Equilibrium prices and quantities can be used to model a broad range of markets and economic activities. The following are illustrative examples of supply and demand.


A luxury brand restricts supply in order to maintain high prices and the status of the brand. For example, they produce 10,000 units of a particular handbag. The market would demand 1 million units at a price below $100. At the actual price of $2000, demand is 1000 units a month and it takes the brand 10 months to sell the inventory.


A type of business software is typically sold as a monthly user-based service. Supply is essentially unlimited as it costs firms very little to scale their services up and down. Worldwide demand for this type of software is 1 million user licenses with 99% of demand falling below a price of $200 per user per month. Any firm that charges more than $200 will only have access to 1% of demand. Below $200, firms are fairly price insensitive and are concerned more with quality than price.

Club Goods

A theme park has a fixed capacity of 100,000 people a day that represents supply. Demand is based on the calendar with high demand on holidays and low demand on workdays and in poor weather. The theme park offers a wide range of discounts on days when they predict demand to be low. On high demand days, no discounts are available.


A commodity is a good that is sold into a market that is so competitive that individual buyers and sellers have no influence on the price and must accept a market price set by supply and demand. Any change to either supply or demand pushes the price up and down. Demand is driven by customer needs and preferences. Supply is driven by things like capacity, efficiency and resource allocation. When demand declines, supply will typically decline as lower prices lead firms to reallocate resources such as land, labor and capital. When demand rises, supply also rises as higher prices attract more firms to the business and existing firms ramp up production.

Common Goods

Common goods are things like air, water and ecosystems that are a shared common resource. They have a fixed, limited supply. Common goods are often used without cost such that demand tends to grow very quickly. This leads to overuse of common goods resulting in their depletion and destruction. Applying a cost to use common goods can correct this as it helps to limit demand. For example, a cost to vent pollution into the air.


Supply of a particular skill set is driven by factors such as demographics and education. Demand for a skill set is driven by factors such as economic growth, recessions, business cycles and technological change. When a skill is in high demand, salaries increase. This causes supply to increase in the long term as the higher salary gives people incentives to acquire the skill.


Supply of assets such as real estate or gold is mostly fixed with small increases over time. Demand can rise and fall dramatically due to factors such as economic conditions, the risk-taking environment, interest rates and money supply. This can lead to periods of significant price increases followed by periods of decline.


A security can suddenly increase in supply. For example, a firm that does a secondary offering of its stock, can increase the supply quickly. Demand for a security is driven by investor estimates for its future returns and risks.


Supply of a currency is set by the monetary policy of a nation. Demand is generated by economic activity such as trade and investment flows.
Overview: Supply And Demand
Supply Definition
The quantity of goods that is provided to a market at a price level.
Demand Definition
The quantity of goods that is purchased from a market at a price level.
Related Concepts


This is the complete list of articles we have written about economics.
Added Value
Advanced Economy
Adverse Selection
Animal Spirits
Attention Economics
Bank Reserves
Bargaining Power
Barriers To Entry
Behavioral Economics
Behavioral Finance
Bounded Growth
Bounded Rationality
Business Cluster
Business Value
Capital Flight
Capital Goods
Category Killer
Circular Economy
Club Theory
Comparative Advantage
Competitive Parity
Cost Competition
Critical Mass
Customary Pricing
Deadweight Loss
Division Of Labor
Economic Activity
Economic Advantage
Economic Bad
Economic Conditions
Economic Context
Economic Development
Economic Growth
Economic Infrastructure
Economic Problems
Economic Sector
Economic Systems
Economic Theories
Economies Of Density
Economies Of Scale
Excess Burden
Experience Economy
Extreme Value Theory
Factors Of Production
Failure Demand
Fiscal Dominance
Food Sovereignty
Free Market
Gains From Trade
Giffen Good
Happiness Economics
Income Distribution
Industrial Complex
Industrial Economy
Inferior Good
Information Asymmetry
Intangible Goods
Intangible Value
Invisible Hand
Knowledge Economy
Labor Productivity
Long Tail
Marginal Utility
Market Conditions
Market Economy
Market Failure
Market Forces
Market Power
Marketing Economics
Mean Regression
Media Economics
Merit Good
Middle Class
Monetary Policy
Plateau Effect
Predatory Pricing
Price Economics
Price Umbrella
Price War
Pricing Strategy
Profit Motive
Rational Choice Theory
Rent Seeking
Rule Of Three
Search Good
Service Economy
State Capitalism
Sticky Prices
Superior Good
Superior Goods
Supply Shock
Sustainable Economics
Switching Barriers
Threat Of Substitutes
Trade War
Traditional Economy
Uneconomic Growth
Unsought Goods
Value Creation
Veblen Goods
Zero-sum Game
If you enjoyed this page, please consider bookmarking Simplicable.


The definition of supply with examples.


An complete overview of demand including the law of demand, equilibrium and elasticity.

Price Economics

A list of price economics principles and theories.

Willingness To Pay

A list of factors that influence willingness to pay.

Sticky Prices

Prices that stick to an established range and resist changing economic forces such as inflation.


A definition of commoditization with examples.

Too Cheap To Meter

A definition of too cheap to meter with examples.

Relative Price

The definition of relative price with examples.


An overview of dumping with an example.

Value vs Price

The difference between value and price with examples.

Market Value

The definition of market value with examples.

Competitive Market

A complete overview of competitive markets with examples.


Everyday examples of economics.

Economics Definition

The definition of economics with examples.

Comparative Advantage Examples

The definition of comparative advantage with examples.

Demand Examples

Common examples of demand in economics.


The common types of shrinkflation.

Quality Bias

The definition of quality bias with examples.


The five common definitions of value with an example.


An overview of economic scale with examples.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map