Market Interaction

The law of demand that there is an inverse negative relationship between the price of the commodity and quantity demanded and it is represented by a sloping curve.

Change in Quantity demanded is the change in the amount of the good (product. commodity) buyers are willing and able to buy in response to a change in its price. 

 

A change in demand is a change in its relationship between the price of the good and the quantity demanded that is caused by a change in something other that the price of the good. A  change in demand is represented by  a movement of the entire demand curve.

Factors affecting the demand curve:

 •   Income
 •   The price of good 
 •   Taste of current fashions
 •   Substitutes 
 •   Complimentary goods
 •   Expectation of change in future and future income and wealth 
 •   The wealth of those who want to buy the producer
 •   High population served by the market

The law of supply state that there is a positive relationship between the price of the good and the quantity supplied and represented by the upward sloping supply curve

Change in quantity supplied is the change in an amount of a good offered for sale in response to a change in its price.

A change in supply is the change in the relationship between the price of a good and the quantity supplied that results from a change in something other than the price of the good

 

Factors affecting the supply curve .

 •   The price of the good.
 •   The current prices of inputs required.
 •   The current technology available to produce the goods.
 •   The number of service

Market equilibrium is the situation that exist when a quantity buyers wish to purchase is exactly balanced by the quantity suppliers wish to sell, there is no tendency to the market price to increase or decrease.