Question

Why does demand curve slope downwards and supply curve slope upwards? Explain. Also differentiate between the movement along a demand curve and shift in the demand curve with the help of examples?

Answer 1

The supply curve generally slopes upward. This is because the higher a price for a good, the higher profit margin the producer can expect, and therefore the greater impetus there is to create or produce as many as possible. Just like with demand, there are a range of factors that can affect supply other than price.