ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Market economies work using the forces of supply and demand to determine the appropriate prices and quantities for most goods and services in the economy.

Detailed explanation-2: -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-3: -It’s a fundamental economic principle that when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged.

Detailed explanation-4: -The scarcity principle is an economic theory that explains the price relationship between dynamic supply and demand. According to the scarcity principle, the price of a good, which has low supply and high demand, rises to meet the expected demand.