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The Law of Supply suggests as prices increase, quantity increases, as well. Or as prices decrease, quantity decreases, too. There is a direct relationship between price and quantity.
A change in quantity supplied implies there is movement from one point on the supply curve to another point on the supply curve.
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A change in supply implies that the entire supply curve shifts to either the left or the right.
To determine, which direction the curve will shift, please refer to the following determinants of supply:
- Input costs
- Other goods
- Other sellers
The Law of Demand suggests as prices increase, quantities decrease and as prices decrease, quantities increase. There is an inverse relationship between price and quantity.
A change in quantity demanded implies there is movement from one point on the demand curve to another point on the demand curve.
A change in demand implies the entire demand curve will shift to either the left or the right.
To determine, which direction the curve will shift, please refer to the following determinants of demand:
- Other goods
- Other buyers
A market consists of both buyers and sellers. The equilibrium point is determined by the intersection of the supply and demand curve, which will dictate the equilibrium quantity and price.
The graph below was constructed by using the values in the table as references.
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