Answer:
Step-by-step explanation:
The law of supply and demand is one of the most important concepts in economics. It states that the price of a good or service is determined by the interaction of supply and demand.
Supply refers to the amount of a good or service that producers are willing to offer for sale at a given price.
Demand refers to the amount of a good or service that consumers are willing to buy at a given price.
The law of supply and demand states that as the price of a good or service increases, the quantity supplied will increase, and the quantity demanded will decrease. Conversely, as the price of a good or service decreases, the quantity supplied will decrease, and the quantity demanded will increase.
The intersection of the supply and demand curves is called the equilibrium price. This is the price at which the quantity supplied equals the quantity demanded. At the equilibrium price, there is no shortage or surplus of the good or service.
The law of supply and demand is a powerful force that influences the prices of goods and services in all markets. It is important to understand this law in order to make informed economic decisions.
Here are some examples of how the law of supply and demand influences the equilibrium price and quantity in a market:
If the supply of a good decreases, the price of the good will increase. This is because there is less of the good available, so consumers are willing to pay more for it.
If the demand for a good increases, the price of the good will increase. This is because more consumers want the good, so they are willing to pay more for it.
If the government imposes a tax on a good, the price of the good will increase. This is because the tax increases the cost of producing the good, so producers pass on the cost to consumers in the form of higher prices.