ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The law of supply and demand is the theory that prices are determined by the relationship between supply and demand. If the supply of a good or service outstrips the demand for it, prices will fall. If demand exceeds supply, prices will rise.

Detailed explanation-2: -(##include msid=4006719, type=11 ##) Definition: Law of supply states that other factors remaining constant, price and quantity supplied of a good are directly related to each other. In other words, when the price paid by buyers for a good rises, then suppliers increase the supply of that good in the market.

Detailed explanation-3: -The law of supply and demand gives insight into the process of price and quantity determination in a competitive market through buyer and seller interaction. For example, the consumer often chooses products and services which come in affordable price tags with desired utility.

Detailed explanation-4: -The law of supply states that a higher price leads to a higher quantity supplied and that a lower price leads to a lower quantity supplied. Supply curves and supply schedules are tools used to summarize the relationship between supply and price.