Law of Demand and Supply is one important law in economics. We shall first define what demand and supply means then we dive into the laws of demand and supply.
What is Demand?
Demand is the amount of product or service that buyers are willing to buy. For example, buyers can be willing to buy 1000 bags of rice at N500 naira per bag.
What is Supply?
Supply on the other hand refers to how much of a product or service that can be sold at a certain price. For example, a rice producer may be willing to sell 1000 bags of rice at N530 naira per bag.
What is the law of Demand?
Law of Demand states that ‘ceteris paribus'(provided all factors remain equal), the higher the price of a good, the less people would be willing to buy such good, that is, the higher the price of a good, the lesser the quantity demanded.
What is the Law of Supply?
Law of Supply states that ‘ceteris paribus’, the higher the price of a good, the higher the quantity sellers or suppliers are willing to sell, that is, the higher the price, the higher the price of quantity supplied. Producers are willing to supply more goods at higher price as its increases sales and revenue.