Question

Explain how the demand for production differs from the demand for goods and services.

Answer 1

Answer:

Demand for production differs from the demand for goods and services

Because

• Aggregate supply and demand are represented separately by their own curves.
• The aggregate supply curve is represented by a curve that slopes upward, which indicates that as the price per unit goes up, a firm will supply more.
• Aggregate supply is a response to increasing prices that drive firms to utilize more inputs to produce more output.
• if the price of inputs remains the same but if the price of outputs increase, the firm will generate larger profits and margins by producing and selling more.
• The aggregate demand curve is a downward sloping curve, indicating that when the price level increases the total spending of an economy decreases.
• if prices in one nation go up making their goods more expensive relative to other nations, that will reduce exports.
• e.g. number of employees and number of factories.