What are the drivers of demand (describe their impact on the demand curve)?
Supply and demand are the basic foundations of economics. “Demand refers to how much of a product or service is desired by buyers . . . Supply represents how much the market can offer” (Hayes, n.d.). There are around 2 million Americans living with amputation (Amputee Coalition, n.d.). While this may seem like a lot of people, it is a very small percentage of the US populations. As such the prosthetics needed for this population are handled by much smaller niche companies. Prosthetics are extremely expensive medical products demanded by a small amount of people. It is necessary for amputees to have prosthetics for mobility, because of this it somewhat defies the law of demand. Despite high prices amputees need them to living meaning that though the price is high there is still high demand.
What are the drivers of supply (describe their impact on the supply curve)?
There is a lot of money to be made in the prosthetic business. With the cost of prosthetics being so high many companies are now more interested in generating components. People are willing to pay for quality than parts rather than suffer through life with substandard equipment.
Is the market price for this good or service determined by the invisible hand of the market? If not, how is it determined and why?
The price of prosthetics is largely determined by the few companies involved in making them as they compete against each other. There are very few companies involved in the manufacturing of prosthetics.
Demand vs Supply of Prosthetics
The demand of prosthetics has increased in the years after 9/11. Many of the soldiers being sent overseas are coming back needing a prosthetic device. This has led to an increase in the need to prosthetics and accessories. This increase in demand has led to new companies starting to develop various prosthetics designs and models. This increase in need of prosthetics has led to an increase of price needed and quantity.
References
Amputee Coalition. (n.d.). Limb Loss. Retrieved on June 28, 2017 from http://www.amputee-coalition.org/limb-loss-resource-center/resources-by-topic/limb-loss-statistics/limb-loss-statistics/#.WVR5bmjyvIU
Hayes, Adam. (nd.). Economics Basics: Supply and Demand. Retrieved on June 28, 2017 from http://www.investopedia.com/university/economics/economics3.asp
Week 1 Lecture. (n.d.). Supply and Demand. Retrieved on June 29, 2017 from http://content2.learntoday.info/ben/MBA510_2012/media/wk01.pdf
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