Question

Explain the law of supply and demand.

Answer 1

Law of demand says keeping other things equal, an increase in the price will lead to a fall in the demand of the goods. For example, If the price of the good is $10 and the demand in the market for the good is 100, if the price of the good increases the demand will fall to less than 100.

Law of supply is just the opposite of the law of demand, it says as the price of the good rises, keeping other thing equal, the supply of the good will rise. For example, the supplier was producing total of 100 goods at the price of $10, if the price rises above the $10 the supply will be more than 100.