Question

Reflecting on the product or service of Amazon discuss the law of supply and demand. How the increase of decrease of the demand affect the supply?

Answer 1

LAW OF SUPPLY:

Supply of goods depend upon several factors. Among these, price is the crucial factor for a producer. Like the demand,supply also depends on price of the good. It is the general tendency of the sellers to supply more quantities when the price increase in the market. Law of supply explains the relation between price and supply of goods. The law of supply states that,when other factors remain the same, the quantity supplied increases with a rise in price and decreases with a fall in rice. Thus,the quantity supplied by producer is directly proportional to the price. The relation between price and supply is positive. This relation exists only when there is no change in other factors. It assumes that there are no changes in technology, price of inputs,weather etc.,

LAW OF DEMAND:

Price Demand expresses the relationship between price and Quantity Demanded of a commodity. Price demand refers to the various quantities of a commodity or service that a consumer would purchase at a given time in market at various hypothetical prices. It is assumed here, that other things like consumer's income, prices of substitutes and complementaries and the tastes of the consumers remain unchanged. Therefore,price demand may be expressed in the form of small function.

Dn=f(p) Quantity demanded and price have an inverse relationship.

A linear demand curve can be written as Qd=a-bp,where the slope.

INCREASE OR DECREASE IN SUPPLY:

Changes in supply due to changes in price are explained with movements along a supply curve. We know that sometimes supply may change due to change in other factors like technology, input prices, weather etc. Such changes takes place on a new supply curve. It is called increase or decrease in supply.

INCREASE OR DECREASE IN DEMAND:

Here the change in demand takes place due to changes in other demand determinants except price. Other determinants refer to consumers income, prices of substitutes and complementaries,tastes of consumer. Thus a changes in demand due to other factors rather than price is known as an increase or decrease in demand. When more quantity is demanded at the same price it is known as an increase in demand. The demand curve shifts towards right to the original demand curve. On the other hand a decrease in demand indicates lesser demand at the same price. The demand curve shifts towards left.