University of Phoenix Material
Supply and Demand Curves
Answer the following questions
Write the definition for each of the following:
1. Law of Demand
Demand is the “wants” that consumers are willing to pay for. The quantity demanded is related to price.
As the price falls people demand more, if the price rises people demand less.
People may want many things, however only what they are willing to purchase is demand. It is important to realize the other variables that affect demand, for example, the law of demand is stated if all things are constant, according to Colander (2013). Some variables that affect demand are disposable income, weather, and people’s taste.
2. Law of Supply
According to Colander (2013) supply is more complicated than demand.
The law states that quantity supplied rises when the price rises, and falls when the price falls.
The supply is related to opportunity cost. The suppliers want to produce more when prices rise as this means higher profit. The law of supply is based on the ability of an organization to substitute one good for another. For example, in the winter in cold areas people buy boots, so a shoe company would not sell very many sandals. The company would have to produce boots to supply the goods to the demanding consumers.
Which of the following graphs best demonstrates the law of demand?
Which of the following graphs best demonstrates the law of supply?
Colander, D. C. (2013). Microeconomics (9th ed.). New York, NY: McGraw-Hill.
References: Colander, D. C. (2013). Microeconomics (9th ed.). New York, NY: McGraw-Hill.
Please join StudyMode to read the full document