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Economics

Supply and demand are key concepts in economics that determine the prices and quantities of goods in a market. The law of demand indicates that lower prices lead to higher demand, while the law of supply suggests that higher prices result in increased supply, with equilibrium occurring when quantity supplied equals quantity demanded. Various factors can influence both demand and supply, impacting market behavior, shortages, surpluses, and price fluctuations.

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9 views1 page

Economics

Supply and demand are key concepts in economics that determine the prices and quantities of goods in a market. The law of demand indicates that lower prices lead to higher demand, while the law of supply suggests that higher prices result in increased supply, with equilibrium occurring when quantity supplied equals quantity demanded. Various factors can influence both demand and supply, impacting market behavior, shortages, surpluses, and price fluctuations.

Uploaded by

anhducto588
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© © All Rights Reserved
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6.

Supply and Demand (Economics)

Supply and demand is a fundamental concept in economics that explains


how prices and quantities of goods are determined in a market. Demand
refers to how much of a product consumers are willing to buy at various
prices, while supply indicates how much producers are willing to sell.

The law of demand states that as price decreases, demand increases (and
vice versa). Conversely, the law of supply says that as price increases,
supply increases. The point where supply and demand meet is called the
equilibrium price—the price at which quantity supplied equals quantity
demanded.

Factors affecting demand include consumer income, tastes, and prices of


related goods. Supply can be influenced by production costs, technology, and
number of sellers. When either shifts, it changes the equilibrium.

Understanding supply and demand helps explain market behavior,


shortages, surpluses, and price changes.

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