2. Supply and Demand

The law of demand and supply is the fundamental law of economic trade. It consists of the demand characteristics of the customer which describes the relationship between price and quantity of goods. For example, if the price of a good is low the customer will buy more goods and services than if the price is high. The relationship between price and the willingness of the customers to buy goods and services is called the demand curve. The other aspect of the demand and supply law is the supply curve which relates the relationship between the price and the quantity of goods suppliers are willing to produce. For example, the higher the price the more the goods and services the suppliers are willing to produce. Conversely, the lower the price the lesser the goods and services the suppliers are willing to produce. The point at which the suppliers are willing to supply a specified quantity of goods and services which are the same as those that the customers are willing to buy is called equilibrium. This chapter studies how the law of demand and supply is changed by the advent of artificial intelligence (AI). It is observed that the advent of AI allows the opportunity for individualized demand and supply curves to be produced. Furthermore, the use of an AI machine reduces the degree of arbitrage in the market and therefore brings a certain degree of fairness into the market which is good for the efficiency of the economy.