According to Supply And Demand, why are higher prices associated with higher quantities supplied? Is it the buyer or seller of cows who respond to lower prices with higher quantities?
In demand supply analysis, we generally consider higher price will increase quantity supplied in the market, as the price of product rises, then indirectly the cost of producing the product decreases, and hence the profit share in per unit production rises for the supplier. Hence they start supplying more product when price of the product rises, increasing the quantity supplied.
Its quite obvious that the buyer will respond to lower price with higher quantity, as the price of the product falls definitely the demand for the product will rise considering cow as a normal good, and by the principle of laws of demand. With lower price buyer will be eager to buy more product, but incase of the supplier indirectly the cost of producing the goods per unit rises due to fall in price of the product and reducing their profit share, hence loosing their incentive to produce more at lower prices.
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