Supply and demand coordinate to determine prices by working together. Supply refers to meeting the demand of something. When a business has a supply of something, they are meeting the demand of what the consumer wants to purchase. Demand is the amount of something and how badly consumers want to purchase something. The demand lets a business know how much to supply.
Supply and demand coordinate to determine prices by together.
Further Explanation:
Supply and demand:
Supply refers to the quantity available of a product in the market by the suppliers or the producers. It refers to a number of products available at a specific price. If the price of the product will decrease, the supply will also decrease. Supply has a direct relationship with the price of the product when the other factors remain constant.
Demand refers to the customers’ desire or a wish to purchase a product and willing to pay at a specific price. And keeping all the other factors constant except the price and if the price of the product will rise, demand will reduce and vice-versa. Demand has an inverse relation with the price of the product.
Supply and demand work out together to determine the price as if there is the supply of the product in the market, then consumers will demand that product, and according to the demand and supply, the determination of the price of the product is done.And demand tells the firm, how much to supply in the market according to the demand of the consumers.
Therefore, supply and demand work together to determine the market price.
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Answer Details:
Grade: High School
Chapter: Supply and demand
Subject: Microeconomics
Keywords:
Supply and demand coordinate to determine prices by working together.
