What are the similarities and differences between the law of demand and the law of supply?
What will be an ideal response?
Both the law of demand and the law of supply deal with market forces and involve the influence of the price of goods and services on actors in the market. However, the law of demand deals with the demand of buyers, whereas the law of supply deals with the supply of goods and services provided by producers. Also, the type of influence price exerts is different for each. For the law of demand, an increased (decreased) price of a good or service causes the demand to decrease (increase). Price and demand, thus, are negatively related. For the law of supply, an increased (decreased) price of a good or service causes the supply to increase (decrease). Price and supply, thus, are positively related.
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Consider a price ceiling imposed on a monopoly. For what quantities will the monopoly's new marginal revenue curve be horizontal at the ceiling price?
a. For quantities where the demand curve lies above the ceiling price. b. For quantities where demand is elastic. c. For quantities where marginal cost is rising. d. Marginal revenue will be constant and equal to the ceiling price for all quantities.
In the United States, the wage rates for high school graduates are growing faster than the wage rates for college graduates
a. True b. False Indicate whether the statement is true or false
When a profit-maximizing firm in a competitive price-searcher market is in long-run equilibrium, price equals
a. marginal cost, and profits are positive. b. average total cost, and profits are zero. c. marginal cost, and profits are zero. d. average total cost, and profits are positive.
An asset's liquidity refers to its ability to be:
A. Bought and stored B. Increasing in value over time C. Used and enjoyed D. A means of payment