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.

Question

Want to see the full answer?

Answer 1

Question

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Should Maureen question the family about the history of the home? Can Maureen access public records for proof of repairs?

3. Distinguish between a direct democracy and a representative democracy. Use appropriate examples to support your answers. [4] 4. Explain the distinction between outputs and outcomes in social service delivery [2] 5. A R1000 tax payable by all adults could be viewed as both a proportional tax and a regressive tax. Do you agree? Explain. [4] 6. Briefly explain the displacement effect in Peacock and Wiseman's model of government expenditure growth and provide a relevant example of it in the South African context. [5] 7. Explain how unbalanced productivity growth may affect government expenditure and briefly comment on its relevance to South Africa. [5] 8. South Africa has recently proposed an increase in its value-added tax rate to 15%, sparking much controversy. Why is it argued that value-added tax is inequitable and what can be done to correct the inequity? [5] 9. Briefly explain the difference between access to education and the quality of education, and why we should care about the…

20. Factors 01 pro B. the technological innovations available to companies. A. the laws that regulate manufacturers. C. the resources used to create output D. the waste left over after goods are produced. 21. Table 1.1 shows the tradeoff between different combinations of missile production and home construction, ceteris paribus. Complete the table by calculating the required opportunity costs for both missiles and houses. Then answer the indicated question(s). Combination Number of houses Opportunity cost of houses in Number of missiles terms of missiles J 0 4 K 10,000 3 L 17,000 2 1 M 21,000 0 N 23,000 Opportunity cost of missiles in terms of houses Tutorials-Principles of Economics m health care