Essay about Economics Holds Many Theories And Laws

1932 Words Jan 10th, 2015 8 Pages
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The subject of economics holds many theories and laws. One such theory is that of supply and demand. Supply and demand has shown to be a fundamental of economics, explaining a large portion of business and corporation affairs; it is the main support of the market economy. The theory of supply and demand describes the relationship between the supply of a product and the demand for that product. In other words, the law shows the effect that the desire for a product has on its set price.

The law is expressed through the variables of quantity and price. The demand of a product refers to the amount of desire to buy a product at a given price. The demand relationship is known as the relationship between the price and the quantity demanded. The supply of a product alludes to the amount of actual product being produced when receiving a certain price. The supply relationship is defined as the correlation between the amount of a product produced and price it sells for. The economic curve of demand is represented with a negative slope, which demonstrates that if the price of a good increases, the quantity produced will decrease due to less desire for that good. This is true for almost all goods because once a certain price for a product is exceeded, people can find cheaper replacements or do without. The law of supply demonstrates a positive slope, which indicates that with a higher price comes a higher quantity produced.

The equilibrium is the point at which the…

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