how does the price of goods affect decisions to trade or not trade
Answers
The law of supply and demand is an economic theory that explains how supply and demand are related to each other and how that relationship affects the price of goods and services. ... However, when demand increases and supply remains the same, the higher demand leads to a higher equilibrium price and vice versa
Answer:
An economic theory known as the law of supply and demand describes how supply and demand are connected and how this connection impacts the cost of products and services. However, when supply is constant, and demand is rising, the higher demand drives up the equilibrium price and vice versa.
Explanation:
How does a rise in supply influence price?
When demand is constant, there is an inverse connection between the supply and pricing of products and services. Prices tend to decrease to a lower equilibrium price and a greater equilibrium quantity of goods and services if the supply of goods and services increases while demand stays the same.
How Do Prices React to the Law of Supply and Demand?
An economic theory called the law of supply and demand describes how supply and demand are connected and how this relationship impacts how much products and services cost. A basic tenet of economics is that prices decline when there is more supply than demand for an item or service. Prices typically increase when demand outpaces supply.
When demand is constant, there is an inverse connection between the supply and pricing of products and services. Prices tend to decrease to a lower equilibrium price and a greater equilibrium quantity of goods and services if the supply of goods and services increases while demand stays the same. Prices tend to increase to a higher equilibrium price and a lesser quantity of goods and services when the supply of goods and services declines and demand stays the same.
The demand for products and services has the same inverse connection. The increased demand, however, results in a higher equilibrium price, and vice versa, when supply is constant but demand rises.
Supply and demand will increase and decrease until an equilibrium price is found. Assume, for instance, that a premium automaker charges $20,000 for a brand-new model of its automobile. Most buyers are not prepared to pay $200,000 on an automobile, even though the initial demand may be strong due to the corporate marketing and creating hype for the car. As a result, the new model's sales swiftly decline, leading to an oversupply and declining demand for the vehicle. In response, the business lowers the car's price to $150,000 to balance the supply and the demand for the car to reach an equilibrium price ultimately.