What is demand and supply in Economics?

Demand and supply is a model used in economics to determine the equilibrium price and quantity in specific market.The equilibrium price and quantity is given by the intersection between the demand curve and supply curve.This is shown in a diagram where, for convention, the y axis is price and x axis is quantity.In particular, the demand curve shows a negative correlation between price and quantity. This means that an increase in price will lead to a decrease in quantity demanded as the product becomes more expensive.On the other hand the supply curve shows a positive correlation between price and quantity. If price goes up, quantity supplied will increase as firms find it more profitable to produce this product.

Answered by Thevinth S. Economics tutor

1931 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain the importance of low interest rates in bringing about a recovery from recession in an economy like the UK. (10)


Buyers in the market for iPhones learn that the price of the Samsung Galaxy has increased. Explain how this would shift demand in the market for iPhones.


Define what is meant by GDP, and explain the limitations of using it as a proxy for economic growth.


Analyse how barrier to entry determine the degree of competition in the British transport market.


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences