Analyzing Demand and Supply Relationship

The report concludes that there is a direct relationship between demand and supply as demand increases then supply also enhances. It highlights various negative externalities caused by alcohol consumption in society and notes government measures to overcome these issues.

Supply and demand

Table of Contents
INTRODUCTION...........................................................................................................................1
1 Demand and supply factors affects the price of silver............................................................1
2 Identification of the negative externalities that may arise from excessive alcohol
consumption in the society..........................................................................................................4
CONCLUSION................................................................................................................................6

INTRODUCTION
Demand and supply is a economic concept which assist in determination of prices.
Demand refers to how much quantity of product are required by the customer and supply refers
to the amount of product which delivers to them. In the following report, the factor of demand
and supply which affect the price of silver has systematically addressed. In addition to this,
theories and concept of the demand and supply has been also discussed. In the second part of this
report, negative externalities about the alcohol consumption has systematically studied.
Furthermore, governmental policies and practices by which alcohol consumption can reduce
within the society has also discussed at the end of this project.
1 Demand and supply factors affects the price of silver
The economic truth of the market is that demand and supply fluctuates the price of any
commodity which includes silver. For example if a strike disturbs the mining then the cost of
silver will rise over a short period. Similarly, announcement of new silver like solar panels assist
increase in purchasing and also raise the price pressure (Zhuo and Wei, 2017).
Existing silver jewellery and other related products is required to be melted down for the
purpose of increasing market supply of this product.
Silver prices are also affected directly and indirectly by new and existing technology. For
example: use of stainless steel are preferred by customer as is cheap in cost which results in
decreasing the price of silver.
If economic time is favourable from the customer points of view then they spend their
money in purchasing silver items which increase demand of it. Similarly, when income of people
decrease then it lowers the purchasing power of customer which means demand of silver will fall
and it leads to decrease in the price of silver.
National and global economic trend is the another factor that affects the cost of commodity.
Silver with gold is considered to be one of the most expensive investment so they are viewed as
reserve the value and purchasing power more as compared to paper currency and other assets at
the time of economic uncertainty. If economic condition is not unfavourable then there is upward
pressure in rise in the price of these products. At the time of inflation it is seen that silver is a
great hedge against this situation.
US dollar is one of the leading currency it has opposite relation with the price of silver.
This market visualises that rise in dollar values creates pressure on the price of this commodity.
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In this time investors wait for the when currency value reaching at an average value as a result
they purchase at bargain price. There is a relationship between gold and silver price. For
example: when the price of gold increases then the price of silver will follow the same trend. As
per expert's point of view purchase and sell of silver is cheaper as compared to gold.
Interest rate is the indicator of whole market condition. Silver market have inverse
relations with the interest rates when interest rate increase price will fall and when interest rate
decrease then price of silver will rise.
Economic problem related to scarcity of silver
Scarcity arises when demand of a particular commodity rises in terms of other goods.
Silver mining is increasing which results in increasing its supply but demand of this product also
rise as compared to its supply as result there is a scarcity of this commodity. Silver is huge in
quantity than gold but the quantity of above ground gold is more available as compared to silver.
It is used in number of goods like CDs , phone , calculator, hearing aids. Electronic switches etc.
as a result there is more demand of this commodity. Scarcity of this goods results in affecting
the production of this goods. Any government has well silver reserves but over the past few
years' government supply have drying down ( Dubey and et.al., 2017).
Figures of silver issues shows drastic fall in the government sale in the past few years
which results in loss of the revenue. In the next few tears it becomes very tuff to buy gold and
silver in exchange of currency. This shortage also creates problems across the country, as many
of the country find it difficult to introduce coins in the market. It also becomes hurdles for
competitors to growing ranks of “silver stackers” and capture the market share. There is scarcity
of fabricated silver bullion products continue for a long time of period.
This economic problem creates trouble for buyer for delivery of various products which is in
demand in the market. As US dollar value rise, then it creates a problem for investors who are
interested in buying silver. Similarly in case of decrease in interest rate the same trouble is faces
by people. The difference between gold and silver is that gold is produced but not consumed, it is
desired product and not an industrial commodity. As a result gold is desired and silver is needed.
If scarcity continues in the future time then silver is also as expensive as gold.
Scarcity issues affects demand and supply
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The law of demand and supply is an economic theory in which demand and supply
affects the price of goods. For example: when demand of silver increases and supply is less in
accordance with the demand of a product then price of a commodity will rise.
Similarly when income of people increases they want to invest in expensive product in
this way demand of commodity rises and scarcity of a product does not allow customer to
purchase product.
Many countries face silver shortages in the upcoming time as investment demand
continues to be rise. Physical demand affects the price as physical trades represents only a little
proportion of highly leveraged turn exchange. Many countries mine are affected as there is
shortage of this commodity, as output is not increasing to meet the demand of a product.
As per the survey it was found that there will more rise in price of silver and supply will
be further reducing . As there shortage of silver which is used for making many products like
jewellery, coins, electronic equipment then in such a case price of these products will also
increase. As silver is used in most of the product so a huge amount is wasted and it cannot be
recover from these products which is scrapped later on. Obtaining silver from nano technology
is not economical.
Theories and concepts
Demand and supply are pillars of an economy. Demand means quantity of product and
services as required by the consumer and supply means quantity of commodity as provided by
the producer. The law of demand, other factors remain equal higher the cost of a commodity
results in fall in the demand of the product and vice versa. Similarly, when law of supply means
when it increases and demand is not increased in accordance with the supply then price will fall
and vice versa. When demand curve moves down to the right then it shows that quantity
demanded by the consumer is rise as result of fall in price. Supply curves shows upward
movement then it indicates quantity supply is increasing along with the price. A change in
quantity demanded and supplied means there is shift in the curve. For example: rise in demand
shows that there is shift to the right of the demand curve which results in movement along with
supply curve, increase in quantity supplied.
Similarly change in income and change in tastes and preferences towards silver can cause the
demand curve to shift. For example people thinks that their currency lose value then the demand
of silver will rise which means demand curve shows rightward movement.
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New silver research and improvement in mining technology can cause supply curve to
rightward movement. Destruction of mining can cause reduction in supply.
Both buyer and supplier are ready to exchange any commodity at certain price, so at this
point demand and supply are required to be in balance or equilibrium. At any price demand is
more than quantity supplied then in such situation consumer is eager to buy the product but
buyer is not willing to supply the same. Consumer pay more price to purchase the same.
A market is not a fair price to all the participants, it does not assure satisfaction on the part of
both the buyer and consumer. It depends on their competitive positions in the market. Either
demand or supply changes it results in change in equilibrium price. Excess products are
available over a range of of price then there is a movement along with demand curve towards a
new equilibrium then in order to remove more supply from the market. As a result customer
purchase more as price decreases.
Fluctuation in demand and supply may be for long or short term, change in consumer
taste and preference results in short run or long run effect. Major changes in technology shifts the
supply curve by decreasing the price of a production. Necessities have stable and long term
effect.
2 Identification of the negative externalities that may arise from excessive alcohol consumption
in the society.
In the present era, there are regularly increase the rate of negative externalities in the
society. It is an activity which occurs due to the production and consumption of the wrongful
things. In a simple word it can be said that while in the society, product or decision costs more
than its private cost. In the country, while level of consumption or production is more than what
actual society required. For example a driver of the car don't pay the cost of air pollution but the
society is paying for the cost of this air pollution. Thus, it can be said that externalities are that
common economic activities which arise from the production and consumption of the good and
services and its effect put on the third party. The study of the externalises by economists has
become extensive in recent years not least because of concern about the link between the
economy and the environment. Externalities are that economic activities which directly impact
on the third parties and arise due to the production and consumption of the good and services. It
can cause by the market failure. The main aspect with respect of externalities is that it create a
difference between the private and social cost of the production and manufacturing. In the
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context of social cost includes all costs of production of the output of particular goods and
services. It includes the third party cost from the pollution and atmosphere. In a simple term it
can be said that social cost is that cost which includes externalities and private cost. There are
various negative consumption externalities like pollution from cars and motorbikes, noise
pollution from using car stereos, negative externalities created by smoking and alcohol abuse,
externalities developed by the smoking and alcohol abuse, negative externalities arising from
crime (Sprague, 2016 ). As per the research it has been founded that in the country, the negative
externalities has been arisen by the alcohol consumption by individuals. Most of the people drink
to socialise, celebrate and relax. Alcohol has strong influence on the people. While alcohol enter
in the blood stream of human being then immediate effects can appear within about 10 minuets.
As individual drink then increase blood alcohol concentration level which is the amount of
alcohol present in the blood stream (Pérez and et.al., 2017). Consumption of the alcohol includes
various impact like reduced inhibitions, motor impairment, memory problem, confusion, coma,
death etc. Thus it can be said that due to the alcohol consumption, various negative impact
occurred with the human being. In addition to this, other risk of the drinking are includes car
crashes, risky behaviour, violent behaviour, suicide and homicide etc. The high rate of alcohol
consumption also increase the chances of cancer, liver damage, depression, depression of the
immune system, reduced sexual performance etc. The long term effects of alcohol arise the
causes' death of brain cell which can lead to brain disorder.
As per the above discussion it can be said that there are several negative impact of the
alcohol consumption on the individual. However, more alcohol consumption can effect on the
society as due to the alcohol, working people can not concentrate on their work. As they are
addicted for the alcohol so their concentration level can automatically reduce from the work. In
addition to this, alcohol also negatively influence to the family. Being a part of the family, an
individual have various roles and responsibility as a sister, brother, father etc. If person were
abuse alcohol then he/she may unable to spend the quality time with other members. In addition
to this, if individual death occurred due to the alcohol then other member life can spoil. Thus, it
can be said that more alcohol consumption largely effect the society. Furthermore, another major
negative effect on the society due to the alcohol is poverty. As in order to purchase the alcohol,
individual spend his money on it. Money spent on alcohol can cause a heavy drinker to fall into
poverty as well. In this manner, causes are like lowered wages, lost of employment opportunities,
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increase medical expenses, decreased eligibility for loan etc. Moreover, another negative
influence on the society due to the alcohol is domestic violence. Many people who are addicted
for alcohol can loss their memory ad react like anger. The presence of alcohol in a person's
system can cause an amplified reaction to a specific situation and their memory can get out of the
control. Another negative externalities due to the excessive alcohol consumption is psychological
harm (Cornish, 2012). Due to the alcohol consumption, depression and schizophrenia occurred in
the human being which create worse condition ion the society. Thus, from the entire discussion it
can be said that there are various negative externalities that may arise due to the excessive
alcohol consumption in the society. Many people and their family life has been spoil due to this
alcohol consumption thus it is very important for the government to make efforts and develop
strategies through which this consumption can automatically overcome. The one of effective
strategy is self awareness among the people.
Government should focus on this aspect and develop such effective measures and policies
through which excessive alcohol consumption can reduce from the society. As per the research it
has been founded that United kingdom has make various efforts to overcome the consumption of
alcohol from the society. In this manner, NHS heath Scotland has successfully banned on multi
buy drinks promotions. As per the UK government it has developed the various legislation and
regulation for purchase and consume the alcohol. The government's strategy is a welcome
attempt to address some issue related to alcohol. The major strategy is personal and premised
license under which the organisation which sale the alcohol must license. Personal license
required to be obtained by designed premise supervisor who will supervise, guide and
consumption of alcohol. These license assist to the society in overcome the illegal use of the
alcohol. With assistance of this license, company can not sale and purchase the alcohol in illegal
basis. This license of the alcohol has assisted to individual in overcome the consumption of
alcohol because while drink will not easily available then people can less consume this thing. In
addition to this, UK government has also made several efforts in order to promote the awareness
about the disadvantage of the alcohol. Government has successfully promoted the negative
impact of the alcohol in the human life and heath of the people. These efforts of the government
associated to the people in getting the knowledge and awareness about the usage of drink. In
addition to this, UK government has organised various welfare program and activities through
which People can effectively know about the negative externalities of this alcohol consumption.
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CONCLUSION
From this entire report it has been concluded that demand and supply of the product and
services have direct relationship with each other as demand is increase then supply also
enhanced. It has been also concluded that in the society, due to the alcohol various negative
externalities by which society negatively influenced. Government has developed various
measures and practices overcoming the consumption of alcohol.
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