Question

Explain demand and supply curves and how they can be used to understand resource allocation?

Answer 1

Demand curve of a good represents the amount of the goods at which the consumer is ready to buy at every price in the market, and the supply curve of the good is how much of the goods the suppliers are ready to produce at a given price in the market.

Demand and the supply curve together represents the equilibrium in the market at the point where they meet, there the demand for the good and the supply of the good are the same. that point represents the perfect resource allocation that means there is no shortage of the goods or surplus of the goods in the market.