Now, coming to the point directly, let us see what these laws actually are.
What Is The Law Of Supply: Definition
Definition for The law of supply states that the relation between the price and the quantity supply is directly proportional (related). (With other factors being constant)
In Layman’s terms, whenever the price of the items/goods increases, suppliers increase the quantity of supply in the market.
Manufacturers will increase the production and the suppliers the supply in order to gain the maximum profit because of the high prices.
There are some factors in the increase in prices. Such as the obvious lack of supply, an increase in expenditure capacity, natural disasters, and government regulations and sometimes currency situation.
What Is The Law Of Demand: Definition
Definition for The law of demand states that the price and the quantity demands are inversely proportional (related) to each other. (With other factors being constant)
In simpler words, whenever the price of the item/product will increase, its demand will decrease and vice versa.
Let us see an example: If you are to buy something 1 KG. The shopkeeper is telling you $60 for 2KG and $70 for 1KG. So, as the price will go down you might demand more.
The other factors are the increase in the buyer’s income, increase or decrease in the prices of the relative products. Also, advertisements.
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