Demand and Supply

We can use the demand and supply model to answer the question. An understanding of supply and demand can help us to analyze many market situations and understand why the prices and quantity available in any given market are decreasing or increasing.

The demand for a product is the amount that customers are willing and able to buy at each and every price, all other things being unchanged. This is shown on a demand curve, which measures the quantity that households are actually able to buy at each and every price, not just the quantity they would like to buy. A demand curve is usually download-sloping.

The demand curve for a product will shift if at each and every price customers are willing and able to buy more or less than they did before. If they demand more the curve will shift to the right. If they demand less then it will shift to the left.

This is half of the market, the other half is the supply curve. The supply of a product is the amount that producers are willing and able to produce at each and every price, all other things being unchanged. The supply curve is usually upward-sloping.

A shift in supply means that the supply curve shifts to the right or left. More (or less) products are supplied at each and every price. An increase in supply is shown by a shift of the supply curve to the right: more is supplied at each and every price. A decrease in supply shifts the supply curve ti the left: less is supplied at each and every price.

Secondary, based on this model, we should know how the auction house runs. There two important part in the auction house. Sellers' and buyers' premiums are calculated on a percentage of the hammer price (the price at which an item is sold at auction). Hammer prices can be adversely affected because buyers pay an additional premium to the auctioneer, and sellers also pay a premium to the auctioneer. A buyer's premium is basically a charge levied by the auction house, which is paid by the buyer in addition to the hammer price. This means that you are paying an additional fee to the auction house.

Say that you successfully bid £100 for a vase. In