What are Supply and Demand?

Demand means a desire for the goods that people want to buy at a given price. E.g. I want to buy shoes @Rs. 1000.

Supply is the total amount of specific goods or services available to consumers at a specific price. E.g., A company is selling shoes @Rs. 999.

LAW OF DEMAND

The law of demand basically deals with the inverse relationship between price and quantity of particular goods or services. But it is under the assumption, other factors like consumer preferences, price of competitive goods, the purchasing power of the consumer are being equal and does not play any role in the law of demand.

To look at the assumptions in detail, “the other things” being equal or those remain statics are the condition to establish law of demand considering price as the only variable factor.

Dx = f(Px)

The condition assumes that there is NO CHANGE in-

Consumer’s income
Consumer’s preferences
Fashion/ trend
Price of related goods
Size, age composition and sex ration of the population
Range of goods available to the consumers
Distribution of income and wealth of the community
Government policy
Weather conditions
Future expected future price changes or shortages

Do you want to learn the core concept of demand & supply like :-

ü Law of Demand,

ü Law of Supply

Click on the video link Economics and Business Environment of Paper -3 & start learning now!

Check out this comprehensive blog Introduction of demand and supply & eliminate all the existing questions in your mind - takshilalearning.com/

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