What Is the Law Of Supply

What Is The Law Of Supply And Law Of Demand


Read Time1 Minute, 18 Seconds

In economics, the law of supply and the law of demand both are equally important. Both are very easy to understand unlike the Diamond Water Paradox or Raghuram Rajan’s Dosa Economics.

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.

More in Economy: Economy Archives


Shubham

Shubham is an ambitious coder. He mostly writes about cloud computing and upcoming technical gadgets. He has widely influenced by the technological world and love to express his judicial opinion on happening activities. And yes he's massive Liverpool Fan.

Leave a Reply

avatar
  Subscribe  
Notify of