Typically changing prices only affect supply and demand when one creates artificial demand for it. In almost any cases, it is typically the supply and demand that affects the price changes.
We must firstly understand how supply and demand affect changing prices before we can understand the opposite effect. For example, if there is 100 units, and there are only 50 buyers, the supply is more than the demand. To generate artificial demand therefore, the supplier may lower the prices in an effort to sell off all units. On the other hand, if there is 100 units, but there are more than 100 buyers, than the supplier may raise the prices. This lowers the demand for the product as well as maximizing profits. This example assumes that there is only one supplier of the unit that is in demand.
If however, the supplier has competitors within the field (and is not bound by law to set a certain rate), they may change the prices to be lower than their competitors, in an effort to increase more demand for the prices. It would artificially drive down prices, thereby making profits less. If competitors are not able to survive with less profit and/or be able to lower their own prices, they would be forced to go out of business, either by closing or selling their shops. In turn, when the original company buys up their competitors assets, they then hold a monopoly or close to a monopoly of the given field. This allows them to artificially change the price on their own discretion, typically known for the term <em>price-gouging</em>. Historically in the United States, this has occurred, especially in the oil industry, but price-gouging of many consumer necessities have been banned and a official rate has been set for them.
Essentially, in a true supply and demand, changing a price to be higher than market value may lead to a lower demand, and therefore a surplus of the product, which leads to a artificial low price, while changing a price to be below market value may generate higher demand, which in turn leads to a artificial high price.
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Athens, Sparta, or Macedonia was three of the larger city states that ruled almost anything it touched.<span />
Explanation:
As governance indicators have proliferated in recent years, so has their use and the controversy that surrounds them. As more and more voices are pointing out, existing indicators – many of them developed and launched in the 1990s – have a number of flaws. This is particularly disquieting at a time when governance is at the very top of the development agenda.
Many questions of crucial importance to the development community – such as issues around the relationship between governance and (inclusive) growth, or about the effectiveness of aid in different contexts – are impossible to answer with confidence as long as we do not have good enough indicators, and hence data, on governance.
The litany of problems concerning existing governance indicators has been growing:
Indicators produced by certain NGOs (e.g. the Heritage Foundation), but also by commercial risk rating agencies (such as the PRS Group), are biased towards particular types of policies, and consequently, the assessment of governance becomes mingled with the assessment of policy choices;
Many indicators rely on surveys of business people (e.g. the World Economic Forum's Executive Opinion Survey). While they have important insights into governance challenges given their interaction with government bureaucracies, the views of other stakeholders are also important and remain underrepresented, as are concerns about governance of less relevance to the business community (e.g. civil and human rights);
The other main methodology used are indicators produced by individuals or small groups of external experts – for example, the World Bank’s Country Policy and Institutional Assessment (CPIA), Bertelsmann’s Transformation Index, and the French Development Agency’s Institutional Profiles. This entails the risk that different experts ‘feed’ on each other’s ratings; and the depth to which external raters are able to explore the dimensions they are rating can vary.
