Category: Microeconomics

Being the diligent students that you are, your mind would have already been ingrained with the law of demand.

Specifically, the law of demand states that as the price of a good or service increases, the quantity demanded by consumers decreases, and vice versa.

However, the law of demand does not always hold true in every situation. There are some cases where the quantity demanded of a good or service increases as its price increases or decreases as its price decreases.

These cases are known as the exceptions to the law of demand.

The law of demand states, all else being equal, that there is an inverse relationship between the price of a good or service and the quantity demanded by consumers.

It states that as the price of a good or service decreases, the quantity demanded for that good or service increases, and as the price of a good or service increases, the quantity demanded decreases.

In simpler terms, people tend to buy more of a product when the price goes down, and when the price goes up, they buy less.

The equilibrium price and quantity of a good or service are determined by the intersection of the supply and demand curves in a market.

The supply curve shows the relationship between the price and the quantity supplied by producers, while the demand curve shows the relationship between the price and the quantity demanded by consumers.

There are two types of changes in demand that can affect the equilibrium point: an increase in demand and a decrease in demand.

An increase in demand means that consumers are willing and able to buy more of the good or service at any given price, causing the demand curve to shift to the right.

A decrease in demand means that consumers are willing and able to buy less of the good or service at any given price, causing the demand curve to shift to the left.

Demand is influenced by certain factors, which are called determinants of demand.

More appropriately, determinants of demand are factors that can affect or determine the demand for goods and services in a market.

To a layman, there may not be any difference between a change in quantity supplied and a change in supply.

However, to economists, these are two distinct concepts that have different causes and effects.

In economics, change in quantity supplied refers to changes in supply for goods and services caused by a change in price while change in supply refers to changes in supply caused by non-price factors.

These two are different from one another. So, in this post, we will look critically at the difference between change in quantity supplied and change in supply.

In economics, change in quantity demanded refers to changes in demand for goods and services caused by a change in price while change in demand refers to changes in demand caused by non-price factors.

So, while a change in quantity demand is represented as a movement along the same demand curve, a change in demand is represented as a shift in the entire demand curve.