Demand and Supply

Demand and Supply

Barbara Walker

Microeconomics ECO 202

January 21, 2015

Jaun Stegmann

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The law of interest expresses that different things staying consistent, as the cost of merchandise expands, the amount requested. Hence there is an opposite relationship between the cost and amount requested. This suggests that the interest bend is descending slanting. This is predictable with the chart.

The law of supply expresses that a different thing staying steady, as the cost of a thing builds, the amount supply additionally increments. In this way there is immediate relationship between the cost and amount supplied. This infers that the supply bend is upward inclining. This law holds well in the chart also.

“The point where the demand and supply curves intersect is known as the equilibrium point” (McConnell, Brue, Flynn, & Grant, 2010). In the above graph you can see that the equilibrium is when E-Books are $10 and the supply quantity and demand quantity are the same which is 8,000.

“A price floor, if set above the market equilibrium price, means consumers will be forced to pay more for that good or service than they would if prices were set on free market principles” (Chron, 2015). There are many reasons why a government would set a price floor, however the typical reason for doing so is an increase in supply and a decrease in demand. In this market the supply is greater than the demand. If the price of E-Books were $12 the demand would increase however it would not increase more than the supplied.

The law of...