Q:

What is the law of supply and demand?

A:

The law of supply and demand is an unwritten rule which states that if there is little demand for a product, the supply will be less, and the price will be high, and if there is a high demand for a product, the price will be lower. If the demand for a product is high, the supply becomes greater, driving down the price.

The law of demand states that the higher the price of a product, the less consumers will demand that product. The law of supply says that producers of a particular good raise the price of that product to increase revenue. Supply and demand work together to help determine how much of a product is produced and what the maximum price of that product can be, to increase revenue for the producer without decreasing the demand.


Is this answer helpful?

Similar Questions

  • Q:

    What does the law of supply state?

    A:

    In economics, the law of supply states that, considering all aspects equal, the price of a marketed good or service is directly proportional to the quantity supplied. As the price increases, the quantity supplied also increases. Conversely, a decrease in the price results in a decrease in the quantity.

    Full Answer >
    Filed Under:
  • Q:

    What is supply and demand?

    A:

    The laws of supply and demand are foundation concepts in the field of economics. The law of demand indicates that under typical circumstances, the greater the price of a good, the lower the demand. The law of supply indicates that the higher the market price, the greater the supply.

    Full Answer >
    Filed Under:
  • Q:

    What is the "law of supply"?

    A:

    The law of supply is an economic concept stating that the price and supply of a good or service are directly elastic to each other. When the price of a good or service increases, the supply of that particular good or service invariably increases, and vice versa. The law of supply states that as price rises, suppliers seek to maximize profits by increasing the quantity supplied.

    Full Answer >
    Filed Under:
  • Q:

    What are examples of supply and demand?

    A:

    Supply and demand are market forces that determine the price of a product. An example is when customers are willing to buy 20 pounds of strawberries for $2 but can buy 30 pounds if the price falls to $1, or when a company offers 5,000 units of cell phones for sale at a price, and only half of them are bought.

    Full Answer >
    Filed Under:

Explore