Supply and Demand
Demand is the quantity of a product that consumers are willing and able to buy at various prices. Supply is the amount of a product that sellers are willing to offer for sale in the market. The Law of Demand states that when the price of a good rises, the demand for it usually falls. This happens because people look for cheaper options or simply buy less. Conversely, the Law of Supply says that when the price rises, producers want to sell more to earn higher profits.
Concepts (3)
A shift occurs when a factor other than price changes. For demand, this could be a rise in consumer income. If Indians earn more, they might buy more cars even if car prices stay the same. This shifts the demand curve to the right.
A shift occurs when a factor other than price changes. For demand, this could be a rise in consumer income. If Indians earn more, they might buy more cars even if car prices stay the same. This shifts the demand curve to the right. For supply, a shift could be caused by new technology. If a new machine makes farming cheaper, the supply of wheat increases at every price, shifting the supply curve to the right.
This concept explains that consumers buy more of a good when its price decreases and less when its price increases, assuming all other factors remain constant (Ceteris Paribus).
This concept explains that consumers buy more of a good when its price decreases and less when its price increases, assuming all other factors remain constant (Ceteris Paribus). For example, if the price of mangoes drops from ₹100 to ₹50 per kg, a family might buy 2 kg instead of 1 kg. This creates a downward-sloping curve on a graph where the vertical axis is Price and the horizontal axis is Quantity.
Equilibrium is the state of balance in a market. It occurs at the price where the Quantity Demanded (QD) equals the Quantity Supplied (QS). At this price, there is no pressure for the price to change.
Equilibrium is the state of balance in a market. It occurs at the price where the Quantity Demanded (QD) equals the Quantity Supplied (QS). At this price, there is no pressure for the price to change. For example, if at ₹40, people want to buy 100 pens and shops want to sell 100 pens, ₹40 is the equilibrium price. If the price were ₹50, sellers might have 120 pens but buyers only want 80, leading to a surplus.
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