We know that when demand and supply curves shift, prices adjust to maintain a balance between the quantity of a good demanded and the quantity supplied. However, if prices did not adjust to changes in demand and supply quantity, this balance could not be maintained. Under the circumstances that shift the demand curve or the…
Supply is defined as the specific product available to the market for consumption. Demand is the amount of a specific product a consumer can purchase at each price. The supply and demand are deeply correlated. These two concepts of supply and demand are tangled to create market equilibrium which defines the availability of goods in…
Equilibrium is the state in which market supply and demand balance each other, and prices become stable. Generally, an over-supply of goods or services causes prices to go down, which results in higher demand—while an under-supply or shortage causes prices to go up resulting in less demand. When the quantity demand exceeds the quantity supplied,…