Question

Explain the laws of supply and demand.

Answer 1

The laws of supply and demand explain the relationship between price and quantity in a market. The law of demand states that as the price of a good increases, the quantity demanded decreases. The law of supply states that as the price of a good increases, the quantity supplied increases.

Step-by-step explanation:

The laws of supply and demand are fundamental principles in economics that explain the relationship between the price of a good or service and the quantity that is demanded or supplied.

• Law of Demand: The law of demand states that, all other factors being equal, as the price of a good or service increases, the quantity demanded by consumers will decrease. Conversely, as the price decreases, the quantity demanded will increase.

• Law of Supply: The law of supply states that, all other factors being equal, as the price of a good or service increases, the quantity supplied by producers will increase. Conversely, as the price decreases, the quantity supplied will decrease.

These laws are based on the concept of incentives. When the price of a good is higher, consumers are less willing to purchase it, and producers are more motivated to supply it. This creates a balance between supply and demand, determining the equilibrium price and quantity in a market.

Answer 2

The law of demand says that at higher prices, buyers will demand less of an economic good. The law of supply says that at higher prices, sellers will supply more of an economic good. These two laws interact to determine the actual market prices and volume of goods that are traded on a market.

What are the 4 basic laws of supply and demand?

1) If the supply increases and demand stays the same, the price will go down. 2) If the supply decreases and demand stays the same, the price will go up. 3) If the supply stays the same and demand increases, the price will go up. 4) If the supply stays the same and demand decreases, the price will go down.