Questions & Answers: Supply, Demand, Production Cost and Pricing
How do businesses decide what to make and sell? Emily:
Basically, businesses want to sell things that consumers like
you and me want to buy. Here at the candy store, the owner has
probably figured out which candies people like the most. He'll
be sure to keep plenty of the popular stuff in stock because he
knows it's gonna sell, and make him some money. Deciding what
items to sell, and what they should cost has a lot to do with
something called supply and demand. What's supply and demand?
Isaac: Well, supply refers to the amount of goods, like candy,
available to purchase at any given time. Demand measures how
many consumers actually want to buy those goods. At a store like
this, supply and demand affects things like what kind of candy
is sold, and how much it's gonna cost you. How does supply and
demand affect prices? Emily: If a particular candy is way
popular, meaning the demand is high, it usually sells at full
price because people are willin