ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Price is dependent on the interaction between demand and supply components of a market. Demand and supply represent the willingness of consumers and producers to engage in buying and selling. An exchange of a product takes place when buyers and sellers can agree upon a price.

Detailed explanation-2: -Supply is generally considered to slope upward: as the price rises, suppliers are willing to produce more. Demand is generally considered to slope downward: at higher prices, consumers buy less.

Detailed explanation-3: -The law of supply and demand states that when the demand for a good or service is higher than the supply, prices are likely to rise. In these circumstances, suppliers tend to produce more to satisfy the demand and take advantage of the margin opportunities.

Detailed explanation-4: -According to the modem theory, the price of a factor of production is determined at a point where the demand and supply curves of the factor intersect each other. This point is known as equilibrium point, where the demand of a factor is equal to its supply.