Question

• Identify factors that change supply and demand for products.
• Explain how changes in the Supply and Demand affect prices and quantities produced.

Answer 1

1. Factors will be affecting the change in the demand and the supply of products are as follows-

A. change in the interest rates in the economy will be affecting the overall demand pattern of consumers and the supply pattern of the companies as it will be leading to increase in the cost, if the interest is increased.

B. Changes in rate of inflation is another factor which will be affecting the overall demand and supply pattern of a company.

C. changes in savings and disposable income trend of a consumer if he feels like there is a economic turnaround or economic downturn in the corner& he will be trying to shift his demand curve.

D. changing in the monetary policy and the fiscal policy will also be impacting the demand and the supply of various products.

E. changing the rules and regulations and change in the government and the stability of the Government and other factors which will be leading to supply patterns changes and the demand pattern changes.

2. Changes in the supply and demand will be affecting price and quantity produced as when there will be a higher demand and lower supply it will mean that there will be increase in price, and when there will be a higher supply and lower demand it will mean that there will be a lower price of the product because there is not enough demand for increasing the price.

hence there will be a relationship between supply and demand in case of price and quantity produced as company will be trying to estimate the supply pattern after the demand pattern and then it will be try to fix the price of product.