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Price, Supply And Quantity

Economics notes

Price, Supply And Quantity


➡️ Price: The price of a good or service is the amount of money that must be paid to acquire it. The higher the price, the lower the demand for the good or service.

➡️ Supply: Supply is the amount of a good or service that is available for purchase. An increase in supply will lead to a decrease in price, which will in turn lead to an increase in demand.

➡️ Quantity: The quantity of a good or service that is available for purchase is determined by the supply. An increase in quantity will lead to an increase in demand, as more people will be able to purchase the good or service.

How does an increase in price affect the supply and quantity of a product?

An increase in price typically leads to an increase in supply, as producers are incentivized to produce more of the product to take advantage of the higher price. However, the quantity demanded may decrease as consumers may be less willing to purchase the product at the higher price.

What factors can cause a decrease in supply?

A decrease in supply can be caused by a variety of factors, including a decrease in the availability of raw materials or resources needed to produce the product, an increase in production costs, or a decrease in the number of producers in the market.

How does the law of supply and demand impact pricing in a market?

The law of supply and demand states that as the demand for a product increases, the price will also increase, and as the supply of a product increases, the price will decrease. This means that in a competitive market, prices will fluctuate based on the balance between supply and demand. If there is high demand and low supply, prices will be higher, and if there is low demand and high supply, prices will be lower.

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