Introduction
Supply and demand analysis is a widespread tool in economic theory to determine the equilibrium price of a good or service. This price is determined by the interaction between demand and supply, meaning that a change in either can make a commodity cheaper or more expensive. The term equilibrium is used because it is expected that the quantity of a service or good supplied perfectly matches the quantity demanded in the market. This type of analysis can be applied to highlighters to identify the factors that affect demand and supply, and how the equilibrium price is affected.
Good Description and Main Characteristics
Highlighters are widely used writing instruments, typically by school and university students, though office workers and researchers also use them. All stakeholders use these tools to mark and emphasize text or entire areas on paper. This activity makes them stand out visually, which helps highlight the most critical information. In other words, highlighters allow people to summarize texts visually without rewriting them.
These products have a myriad of characteristic features deserving attention. First, people typically like bright, vibrant colors because orange, pink, yellow, and green immediately attract attention and help emphasize information. Second, highlighters usually have transparent or semi-transparent ink of various colors. This transparency is significant since it allows for meeting two goals at once. When the text is distinguished with a different color, it remains visible and readable.
Third, modern, high-quality highlighters feature fast-drying inks, which are convenient for users. This feature prevents smudging in highlighted areas, resulting in a cleaner, tidier appearance of text. Finally, people like these products for their different tip styles, such as bullet or chisel tips. Thus, individuals can choose the most appropriate option and emphasize large areas of text with a single stroke.
Substitutes and Complements
Stakeholders can use different instruments as substitutes for the good under analysis. They include colored pens and pencils, as well as different types of markers. Even though these products impress with their various colors, they fail to deliver the same functionality as highlighters do. In particular, pencils are insufficiently bright, while pens and markers lack transparency. This information demonstrates that none of the mentioned products can be considered full substitutes for highlighters, indicating that highlighters have a competitive advantage.
It is additionally reasonable to comment on compliments for the good. Since this instrument is used to highlight text on paper, its typical complements include various office supplies, such as textbooks, notebooks, and sticky notes. All these products are used in combination to help stakeholders work with printed information.
Normal Good
A reasonable guess reveals that highlighters are a normal good. According to a widely accepted definition, a good is normal if increased income leads to greater demand for the product (Agarwal, 2022). Inferior goods are the opposite: their demand decreases with higher income (Agarwal, 2022). That is why highlighters are considered normal, since elevated earnings typically lead to increased educational and professional activities.
Consequently, people face a greater need to read more texts and emphasize significant details. Simultaneously, a better financial position allows individuals to invest more in high-quality writing instruments that meet their expectations. This information clearly demonstrates that there are reasonable grounds for the claim that the product is standard.
Affecting the Demand
Various factors determine the demand for any product, and highlighters are no exception, since people may require more or fewer of them depending on different conditions. First, the growing popularity and importance of higher education lead to increased demand (QR Research, 2023). As more people engage in educational activities, more highlighters are needed.
Second, the total number of office workers continues to rise in the United States (QR Research, 2023). Some of these professionals require the selected products to handle both textual and numeric data, which increases overall demand. Third, one should consider the influence of technological advancements and multiple innovations in everyday life. These processes facilitate the introduction of digital devices and specialized applications that eliminate the need to work with printed materials. This state of affairs indicates that demand for highlighters is decreasing.
Influencing the Supply
A similar situation exists with supply, as multiple nonprice factors can affect it. Highlighters are manufactured from specific raw materials that should typically satisfy established quality standards (Interwell Stationery, n.d.). Thus, if suppliers face problems or a global disaster disrupts existing supply chains, the supply of the selected products can suffer.
Currently, the manufacturing process involves appropriate technologies and a skilled team. The introduction of a new technology or machine can significantly increase supply by making the production process easier and faster. In addition, one should not forget the power of regulatory changes and trade policies. In the modern, globalized world, the introduction of trade tariffs in one country can significantly affect the global supply of a particular product. Thus, the presented information reveals that various processes and events can increase or decrease the supply of highlighters.
Demand and the Equilibrium Price
One should perfectly understand that changes in demand will inevitably affect the equilibrium price and quantity of the product in the market. On the one hand, an increase in demand is beneficial and attractive for producers. According to Di Pietro et al. (2021), a higher number of people who want to buy highlighters increases the equilibrium price. This feature encourages manufacturers to increase production to meet growing demand for the product.
On the other hand, the opposite situation is found when demand falls. This condition denotes that a lower number of individuals who want to purchase highlighters contributes to a lower equilibrium price (Di Pietro et al., 2021). When producers witness this, they are less interested in introducing large volumes of the product into the market. That is why they tend to limit production, resulting in fewer units offered to customers.
Supply Changes and the Equilibrium Price
Supply is another essential factor in economic theory, and its fluctuations significantly influence the market. When an elevated supply is found, it means producers are offering more products than customers require. In this case, the excess in quantity occurs because some volumes of the good remain lying idle. This fact lowers the equilibrium price, as the decrease can motivate others to purchase the product (Zhang & Nie, 2021).
A different scenario occurs when supply decreases. This statement denotes that manufacturers fail to meet the existing demand because there is an insufficient quantity of goods in the market. Thus, some customers may be left without the needed commodity, leading some to be willing to pay more to obtain it (Zhang & Nie, 2021). Consequently, a decrease in supply indicates that the equilibrium price is expected to rise.
Demand Forecast
The conducted research allows for making an approximate prediction of how the demand for highlighters will change over the next five years. According to QR Research (2023), demand is typically determined by long-term factors, including the popularity of higher education and the growing number of office workers. These are widespread trends that affect the entire nation and the whole developed world. That is why it is not reasonable to expect that the future will see fewer people who need tools to emphasize information.
While some people believe that the active use of technology will eliminate the need for highlighters, a recent report refutes this suggestion. Shaw (2022) indicates that the demand for this product has been relatively stable for the last five years in the United States. Since the devices have not yet replaced the product totally, they are not going to do it in the near future. That is why it is reasonable to expect demand to grow slightly amid seasonal downward movements.
Supply Prediction
Forecasting future supply is more challenging because, as noted above, it depends on large-scale processes. For instance, supply can be affected by regulatory changes, technological advancements, and supply chain disruptions (Interwell Stationery, n.d.). It is challenging to predict when and how such significant events can occur, and the COVID-19 pandemic is a suitable example. When the crisis emerged, it affected the entire world and stopped the production of many goods.
A similar event can significantly reduce supply, while a revolutionary new technology can boost it. Since reliable data on the likelihood of these events is unavailable, it is unreasonable to expect any dramatic changes in highlighter supply. For manufacturers, a suitable strategy is to invest in market research to meet the existing demand. Since the next five years are expected to witness slightly rising demand, an ideal strategy for producers would be to mirror this trend in their facilities; thus, it is reasonable to expect a steadily growing supply over the next five years.
Conclusion
The report presents a comprehensive overview of highlighters and their market position. Many stakeholders request these writing instruments because they allow printed information to be emphasized with bright, transparent colors. This product has a few substitutes, but none of them have the potential to replace highlighters completely in the market. The analysis of the available evidence has revealed that multiple nonprice factors can increase or decrease the demand and supply of this good. These movements are meaningful for economic theory because they impact the quantity of the product in the market and its equilibrium price.
On the one hand, higher demand raises prices and increases quantity, while lower demand lowers prices and reduces quantity. On the other hand, increased supply brings more products, reducing prices, whereas decreased supply raises prices because there is insufficient quantity. In conclusion, the market is expected to see a smoothly growing supply of highlighters, mirroring demand fluctuations over the next five years.
References
Agarwal, P. (2022). Inferior good. Intelligent Economist.
Di Pietro, F., Lecca, P., & Salotti, S. (2021). Regional economic resilience in the European Union: A numerical general equilibrium analysis. Spatial Economic Analysis, 16(3), 287-312.
Interwell Stationery. (n.d.). Certified custom highlighter pens manufacturer since 2003.
QR Research. (2023). Decoding the highlighters market: A deep dive into the latest market trends, market segmentation, and competitive analysis. LinkedIn.
Shaw, S. (2022). A practical industry analysis report of highlighters. Leeline Sourcing.
Zhang, K., & Nie, Y. M. (2021). To pool or not to pool: Equilibrium, pricing, and regulation. Transportation Research Part B: Methodological, 151, 59-90.