How does the low of demand differs from the low of supply explain with practical examples
The law of demand states that as the price of a good or service decreases, the quantity demanded of that good or service will increase, all other factors being equal. On the other hand, the law of supply states that as the price of a good or service increases, the quantity supplied of that good or service will also increase.
To understand the difference between the two, let's consider two examples:
1. Law of Demand:
Imagine a clothing store that sells a popular brand of jeans. If the store decides to lower the price of the jeans from $50 to $40, consumers may be more inclined to purchase them, resulting in an increase in the quantity demanded of the jeans. This is because the lower price makes the jeans more affordable and attractive to customers.
2. Law of Supply:
Now, let's consider a local farmers market that sells organic tomatoes. If there is a sudden increase in demand for organic tomatoes due to health trends, the price of the tomatoes may increase from $2 per pound to $3 per pound. In response to the higher price, farmers may decide to increase their tomato production, leading to a higher quantity supplied of organic tomatoes in the market.
In both examples, we see the fundamental difference between the law of demand and the law of supply: the law of demand focuses on consumer behavior in response to price changes, while the law of supply focuses on producer behavior in response to price changes.