Demand and Law of Demand Essay

Demand is the willingness and ability of buyer to purchase different quantities of a good at different prices during a specific period of time. By definition, the law of demand refers to: As the price of a good rises, quantity demanded of that good falls; as the price of a good falls, quantity demanded of that good rises, ceteris paribus. The Law of Demand states that people will buy more of a product at a lower price than at a higher price, if nothing changes. Besides that, it also states that at a lower price, more people can afford to buy more goods and more of an item more frequently, than they can at a higher price. Other then that, it also states that at lower prices, people tend to buy some goods as a substitute for others more expensive. There are four ways to represent The Law of Demand; 1. In wordsï ¼Å¡As price rises, quantity demand falls, ceteris paribus. 2. In symbols: P(price)↑Q(quantity)↓ 3. In a demand schedule 4. In a demand curve Explain supply and the law of supply.  By definition, supply is the willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during specific period of time. Law of Supply refer to: As the price of a good rises, the quantities supplied of the good rises; and as the price of a goods falls, the quantities of the good falls The Law of Supply states that at higher prices, producers are willing to offer more products for sale than at lower prices. Besides that, it also states that the supply increases as prices increase and decreases as prices decrease. Other then that, it states that those already in businesses will try to increase productions as a way of increasing profits. How market equilibrium is achieved? Market equilibrium is a condition under which the quantity supplied is equal to the quantity demanded; when a market is in equilibrium, there is no tendency for change. The equilibrium price is the price at which the quantity demanded is equal to the quantity supplied. Shortages occur when  price is below the equilibrium price; shortages cause the price to rise. Surpluses occur when price is above the equilibrium price; surpluses cause the price to fall.