In economics, what is the relationship between supply and demand?
Supply and demand economics is the study of how prices are determined by the interaction of buyers and sellers. Supply is the quantity of goods a company is willing to sell at a given price, while demand is the amount of a product consumers are willing to buy. The price of a product is determined by the point where the supply and demand curves meet.
Supply and Demand Economics: The Basics
Supply and Demand: A basic economic law which states that prices of goods and services are determined by the balance between the availability of a product and the demand for it. Elasticity: A measure of the degree to which changes in price affect the demand for a product. Equilibrium: A state in which market supply and demand are balanced and in the absence of external influences, the market price is stable.
Which of the following best describes the supply and demand economics of a business?
- The more people that want the product, the higher the price
- The more people that supply the product, the higher the price
- The more people that want the product, the more people that will supply it
- The more people that supply the product, the lower the price
The law of supply and demand states that when demand increases, prices will rise, and when supply increases, prices will fall. Supply and demand economics is used to explain why certain types of goods or services are more expensive than others. Supply and demand economics can be used to explain why certain types of goods or services become more popular over time, as well as why some goods or services become scarce.
Did you know?
How does the concept of supply and demand affect the success of a business in a competitive market?