The Law of Supply and Demand Answers

A shift in supply occurs when the amount of a good producers are willing and able to sell changes because of factors such as resource costs, technology, labor, or competition. A shift in demand occurs when the amount consumers are willing and able to buy changes because of factors such as income, population, prices of related goods, or consumer tastes. An increase in supply usually lowers prices and increases the quantity sold, while a decrease in supply raises prices and reduces quantity. An increase in demand usually raises both prices and quantity, while a decrease in demand lowers both.

A supply shift occurs when producers offer more or less of a good at each price, often because resource costs, technology, or the number of sellers changes. A demand shift occurs when consumers want more or less of a good at each price, often because income, tastes, or the number of buyers changes. An increase in supply tends to lower the market price and increase the quantity sold, while a decrease in supply tends to raise the price and lower the quantity sold. An increase in demand tends to raise both the market price and quantity sold, while a decrease in demand tends to lower both.