ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Lower prices mean reduced supply, all else held equal. Higher prices give suppliers an incentive to supply more of the product or commodity, assuming their costs aren’t increasing as much. Lower prices result in a cost squeeze that curbs supply. As a result, supply slopes are upwardly sloping from left to right.

Detailed explanation-2: -If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.

Detailed explanation-3: -Prices have a direct effect on producers and their decision making because when there is a price decrease, producers must increase their supply (which is the law of supply).

Detailed explanation-4: -Demand Decrease: price decreases, quantity decreases. Supply Increase: price decreases, quantity increases. Supply Decrease: price increases, quantity decreases.