Economics 101: Supply and Demand with Examples of Cryptocurrencies

The basic concept of economics with examples including cryptocurrencies.If you’ve ever encountered economics courses, the first thing being taught is the law of supply and demand. Now, we’ll discuss the law of supply and demand with examples.There are two ways to study this law: the law of supply and the law of demand interacts to determine market prices and the volume of all the goods and services in the market.The law of supply and demand is required to understand the whole concept of economics and to study cryptocurrency markets.The supply side of the lawIn economics, when the supply increases, prices get decreased and users tend to demand more of a good as the increased supply reduces current market prices. When we look at the inverse scenario, when prices become lower, producers decrease supply to raise the prices of goods.The demand side of the lawConsumer demand is one of the determinants that can drive the prices of goods. If consumers demand more goods, prices will increase. As a result, producers will produce more goods to derive more revenue. Demand for goods decreases when the prices increase.When shortage occursTaken from Kanika’s Economic BlogWhen the prices decrease, consumers tend to demand more of a good. However, producers tend not to produce goods and services. As the supply got reduced to raise the prices to make a profit and consumers are demanding more goods, a shortage occurs in the short run. After shortage occurs, the market adjusts to the initial equilibrium.When surplus occursTaken from lumen learningWhen prices become higher, consumers demand fewer goods, and producers produce more to generate more profit. However, users don’t buy goods and surplus occurs. After surplus occurs, the market adjusts to the initial equilibrium.ExpectationsExpectations efficiently affect supply and demand. When suppliers think that the price of goods increases to…