From the course: Data Analytics for Pricing Analysts in Excel
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Supply and demand - Microsoft Excel Tutorial
From the course: Data Analytics for Pricing Analysts in Excel
Supply and demand
- [Narrator] The cornerstone of pricing is supply and demand. The concept of supply is simply the amount of a product that businesses will make for sale based on its price. The supply of a product is determined really by how much the product sells for in comparison to how much it costs to make. If a product sells for a lot more than it costs to make and profits in making it are very high as a result, then many different businesses will flock to make that product and supply rises. If profit margins are low, then supply falls. We can represent all of this graphically with a supply curve. This is an illustration of a supply curve. As we see, the line slopes upward. That indicates that as product price rises, businesses produce a greater quantity of that product. The higher the price, the more the businesses produce. This is the supply side. Now, the other side of the coin is the customer. We refer to the customer side of…
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