ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A change in supply leads to a shift in the supply curve, which causes an imbalance in the market that is corrected by changing prices and demand.

Detailed explanation-2: -Changes in prices come from shifts in market supply, market demand, or both. Economists use comparative statics to predict changes in prices. This technique explains how changes in exogenous variables cause shifts in supply and/or demand curves, which lead to changes in prices.

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: -Factors such as taxes and government regulation, the market power of suppliers, the availability of substitute goods, and economic cycles can all shift the supply or demand curves or alter their shapes.

Detailed explanation-5: -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.