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as prices fall supply drops off but demand increases. as prices rise supply increases but demand falls. the system is auto correcting. i'm assuming perfect competition for the following examples (which is when there are many competitors in a market with no product differentiation and no one competitor can set the price of the market and is subject to market forces. think like wheat or corn). if the price of the product is low demand will be high (demand will be low because the prices are low and the consumer will always seek the lowest price ) but supply will be low (this is because the producers always seek the highest possible price). the producers wont be maximizing their profits if they produce when demand is low. but conversely if prices are high demand will be low (remember the consumer is always seeking the lowest possible price) and supply will be high (because the producers will want to maximize profit and make more when the price is high). one condition neutralize the other. the market will alternate between the two conditions each time swing closer to equilibrium (the point at which the supply and demand curves intersect). equilibrium is the most effecent point in the market.
What else can I help you with?
What direction does the supply curve slope from the left to right?
Supply curves do not always slope from left to right. A supply curve can slope from the right and when this happens this means that there is a surplus of goods at a lower price.
Why does a supply curve slope upwards?
it is so because, there exists a positive relation between price and supply, i.e wen price increase then supply olso tends to increase the same. . .
How is the slope of this supply curve different from the slope of market demand curve?
The slope of the supply curve typically slopes upwards, indicating that as the price of a good increases, producers are willing to supply more of it. In contrast, the market demand curve slopes downwards, reflecting that as prices decrease, consumers are willing to purchase more of the good. This fundamental difference in slope arises from the opposing behaviors of suppliers and consumers in response to price changes. Consequently, the interaction of these two curves determines the market equilibrium price and quantity.
What are the three characteristics of a supply curve?
The three characteristics of a supply curve are the slope, shift, and the curve's position. Together they help determine supply and demand trends.
How would a new excise tax effect the supply curve?
It would probably cause the supply curve upwards and shift to the left.
What direction does the supply curve slope from the left to right?
Supply curves do not always slope from left to right. A supply curve can slope from the right and when this happens this means that there is a surplus of goods at a lower price.
Why does a supply curve slope upwards?
it is so because, there exists a positive relation between price and supply, i.e wen price increase then supply olso tends to increase the same. . .
How is the slope of this supply curve different from the slope of market demand curve?
The slope of the supply curve typically slopes upwards, indicating that as the price of a good increases, producers are willing to supply more of it. In contrast, the market demand curve slopes downwards, reflecting that as prices decrease, consumers are willing to purchase more of the good. This fundamental difference in slope arises from the opposing behaviors of suppliers and consumers in response to price changes. Consequently, the interaction of these two curves determines the market equilibrium price and quantity.
What are the three characteristics of a supply curve?
The three characteristics of a supply curve are the slope, shift, and the curve's position. Together they help determine supply and demand trends.
How would a new excise tax effect the supply curve?
It would probably cause the supply curve upwards and shift to the left.
Supply curve slope downward?
supplycurve is negative slope in decreasing cost industry
Is demand curve canbe upwardly sloping?
A demand curve can have an upwards slope. It solely depends on if the demand for an item is high or low.
In which direction does the supply curve slope from the left to the right?
upward
What does the slope of the supply curve reflect?
Rising Marginal Costs
In which direction does the supply curve slope from left to the right?
upward
For a given increase in supply the slope of both demand curve and supply curve affect the change in equilibrium quantity Is this statement true or false Explain with diagrams?
For a given increase in supply the slope of both demand curve and supply curve affect the change in equilibrium quantity Is this statement true or false Explain with diagrams?
Why does the LM curve slope upwards?
In equilibrium: Money supply = Money demand.Summarizing it, we can explain the upward sloping LM curve as following:If income is high then thedemand for money will be high relative to the fixed supply. In order to equilibrate money demand and money supply, interest rates have to also be high to reduce money demand
