Final answer:
According to the law of supply, when the price of a product increases, producers increase the quantity they wish to sell. Changes in demand and supply also affect the equilibrium price and quantity in both the product and labor markets.
Step-by-step explanation:
Let's explore what happens to the equilibrium price and quantity in different scenarios:
An increase in demand generally leads to a higher equilibrium price and a greater equilibrium quantity, as more consumers compete to purchase the product.
A decrease in demand typically results in a lower equilibrium price and a smaller equilibrium quantity, as the product becomes less sought after.
An increase in supply usually causes the equilibrium price to fall but the equilibrium quantity to rise, as more of the product is available.
A decrease in supply often leads to a higher equilibrium price and a reduced equilibrium quantity, as the product becomes scarcer.
These relationships apply to both the product market and the labor market, with the principle of supply and demand affecting prices and quantities.