Supply and demand

Running head: SUPPLY AND DEMAND 1
Supply and Demand
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SUPPLY AND DEMAND 2
Supply and Demand
The drivers or the determinants of the demand of the orange juice in the market include the
number of the factors. First, the consumer’s taste and preferences which are centered on what they
like and what they do not desire to purchase in the market (Azevedo & Leshno, 2016). Secondly,
the level of income of the consumers directly influences the demand curve which determines their
ability to make a substantial purchase. Thirdly, the prices of related goods and the customers’
anticipation with respect to what they are willing to buy at a specific time in a particular selling
center influences the demand curve (Azevedo & Leshno, 2016). Lastly, the number of the
consumer anticipating to purchase the products is also the most influential drivers of the demand
in a free market. However, when any of the above drivers escalates in amount, eventually it results
to the shift of the demand curve to the right, which differs sharply from what is observed from the
movement along the curve triggered by both price and quantity changes. Conversely, when any of
these determinants decreases in amount, the demand curve shift to the left.
The drivers of supply are not entirely embedded in the consumer just like the ways they are
found in the demand curve. These determinants include resources, technology, subsidies, taxes,
the seller’s anticipations and the price of other products in respect to some sellers, market price,
and the competitive edge (Azevedo & Leshno, 2016). However, the impacts of these drivers are
exhibited when there is an increase in the supply of oranges, the supply curve shift to the right
which is accompanied by a decrease in the equilibrium price and quantity proportionally.
In the existence of the free market, where the prices are not subject to the control of the
government, the market prices are exclusively determined by the invisible hand of the market and
SUPPLY AND DEMAND 3
the subsequent services that are provided along the way (Azevedo & Leshno, 2016). For example,
the oranges (under consideration) are grown by the farmer, who disposes them to the distributor
who eventually takes them to supermarket or grocery store for easy accessibility to the consumer
who purchases them. Therefore, the market price for oranges is dependent on the invisible hand
because each vendor has the particular price, and ultimately all aspects of the invisible hand collide
in the effort of reaching the consumer.
According to Azevedo and Leshno (2016), the demand for orange juice in the free market
has reduced significantly for the subsequent years since from 2011 to 2015. However, the downfall
of the need for this product in the American market has been due to the availability of a great
variety of beverages and energy drinks such Red Bull and juice-based health crazes such as
pomegranate. In this respect, the drop in demand of the orange juice indicates the fluctuation of
the consumers’ taste and preference, their projections and perhaps the changes in prices of the
related goods. As a result, the demand curve shift to the left which depicts a drop in demand for
the product.
From the fact that the number of the Americans consuming orange juice is drastically
reducing, it is certain that the supply of the orange juice has also been in a decrease to prevent
surpluses from occurring. This implies that the supply curve has shifted to the left, which reflect
changes in sellers’ expectations since the suppliers do no longer expect the consumers to consume
as much as juice oranges as before (Azevedo & Leshno, 2016). Eventually, this shift has also
affected the several sellers in which the number is tremendously decreasing because of market
uncertainty.
SUPPLY AND DEMAND 4
References
Azevedo, E. M., & Leshno, J. D. (2016). A supply and demand framework for two-sided matching
markets. Journal of Political Economy, 124(5), 1235-1268.
Ruttan, V., & Thirtle, C. (2014). The Role of Demand and Supply in the Generation and Diffusion
of Technical Change (Vol. 21). Routledge.
SUPPLY AND DEMAND 5

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