Markets and Market Failure

Abstract

The previous chapter analysed the concepts of demand and supply as separate entities. The discussion that follows links the two explicitly. After all, a householder’s demand will not be realised if no one is willing and able to supply the desired commodity, and similarly a firm will not wish to produce a commodity unless there is some indication that there is a demand for it. When buyers and sellers are able to communicate their willingness and ability to demand or supply a good or service to each other, a market is formed.