Question

how do changes in the factors that affect demand or supply affect the market price and quantity of good ?

how do markets allocate resource?

Answer 1

Factors that affect demand leads to either rise in demand or fall in demand. Given the supply curve, a rise in demand leads to rise in equilibrium Price and rise in equilibrium Quantity. and vice versa.

Factors that affect supply leads to either rise in demand or fall in supply. Given the demand curve, a rise in supply leads to fall in equilibrium Price and rise in equilibrium Quantity and vice versa.

Changes in Price level leads adjustments in supply and demand such that eventually both becomes equal.

Markets allocate resources due to the interaction of demand and supply. When demand equals supply that quantity is choosen as Equilibrium quantity and that price level is equilibrium Price level.