Question

Choose a particular product or service and explain its demand and supply. What is the relationship between Price and Quantity Demanded? What is the relationship between Price and Quantity Supplied?

Answer 1

Let's take the ice creams.

In the summer month just around the corner, we all like to have more and more of it. IN the summer season the demand for the Ice creams increase and because of the high demand, the supply of the Ice creams will also increase in the market.

There is a negative relationship between the price and quantity demanded in the market. As the price of goods increase the quantity demanded for that good decrease because people will not be ready to buy the goods at a very high price, they have a budget and a limited income. For example, if the Ice cream is sold for $5 many students will demand it but if the price of the same ice cream is increased to $100 with the same taste and quality no one will demand those ice creams.

The price and quantity supplied have a positive relationship. If the price of the goods are high the supply of that good will increase. Let's take the example of the same ice cream. when the price of the ice cream was $5 there were 10 stores supplying it. But, when the price of the ice cream will increase the profit the stores earn by selling those will also increase so more an more stores will keep those costly ice cream. And the supply of ice cream will increase.