Question

Recognize how changes in supply and demand affect market outcomes and explain the effect of government regulation on prices?

Answer 1

Market outcomes are influenced by every changes in supply and demand. In pricing a product demand and supply plays as significant role because production changes with the same. Supply is defined as the quantity of product per unit time that willing to sell at different prices as other factors are standing unchanged. Price off thee good and related ones, production conditions, the price value of inputs, suppliers, regulations and other policies of government all affects the supply. As thee price value of products increases the number of suppliers also increases. And the production shows a large increase. Production costs in decreases when the supply rises so it also cause rise in production. Demand can also affect business . In the recent scenario Covid 19 has caused huge diminish in demand for products will decreases the production. Rise in price also decreases demand and production .When the price lowers demand increases. Increased demand helps to enhance the production of products.

Business pricing strategies will be influenced by regulations imposed by government. Legal problems may arise when the regulations set by government where ignored. Sometimes business will have a rise in the prices off their products. Then consumers should face negative affect as it may become unaffordable. On Certain products such as alcohol or other products government increase prices for the regulate the use. It can have a bad impact as drugs containing medicines production get greatly affected and cause bad affects. The total supply and demand changes. Demand can be decreased so the price get lower. And the business come across decline. In specific other areas as prices regulated to a high value then supply will get increased and demand decreases . And low price will controversy increases demand and decreases the supply.