Law of demand , Law of Supply, Increase/Decrease in the demand and supply, Market equilibrium Concept Introduction- Law of Supply − Other things being equal, It states that as the price of a good increases its quantity supplied increases and vice versa. In other words, there is a direct relationship between the quantity supplied and price of the good. The law is based on the assumption of ceteris paribus, that is, all other factors affecting supply remain constant. Law of Demand − Other things being equal, it states that as the price of a good increases its quantity demanded decreases and vice versa. In other words, there is an inverse relationship between the quantity demanded and price of the good. The law is based on the assumption of ceteris paribus, that is, all other factors affecting demand remain constant. Change in Supply- It is also known as the Increase/Decrease of Supply. A change in the supply due to factors other than price called exogenous factors like cost of production, level of technology etc. causes the supply curve to shift. Change in demand- It is also known as the Increase/Decrease of demand. A change in the demand due to factors other than price called exogenous factors like income of the consumers, their tastes and preferences and prices of substitutes and complements causes the demand curve to shift. Market Equilibrium- The price output combination where quantity demanded equals the quantity supplied is the market equilibrium. It is based on the operation of the law of demand and the law of supply.

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Chapter 4, Problem 4.2LO

To determine

Law of demand, Law of Supply, Increase/Decrease in the demand and supply, Market equilibrium

Concept Introduction-

Law of Supply − Other things being equal, It states that as the price of a good increases its quantity supplied increases and vice versa. In other words, there is a direct relationship between the quantity supplied and price of the good. The law is based on the assumption of ceteris paribus, that is, all other factors affecting supply remain constant.

Law of Demand − Other things being equal, it states that as the price of a good increases its quantity demanded decreases and vice versa. In other words, there is an inverse relationship between the quantity demanded and price of the good. The law is based on the assumption of ceteris paribus, that is, all other factors affecting demand remain constant.

Change in Supply- It is also known as the Increase/Decrease of Supply. A change in the supply due to factors other than price called exogenous factors like cost of production, level of technology etc. causes the supply curve to shift.

Change in demand- It is also known as the Increase/Decrease of demand. A change in the demand due to factors other than price called exogenous factors like income of the consumers, their tastes and preferences and prices of substitutes and complements causes the demand curve to shift.

Market Equilibrium- The price output combination where quantity demanded equals the quantity supplied is the market equilibrium. It is based on the operation of the law of demand and the law of supply.

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