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 the amount producers are willing to sell at each price changes, often because of production costs, technology, resource availability, or the number of sellers. A demand shift occurs when the amount consumers are willing to buy at each price changes. Demand can shift when income, tastes, the number of buyers, or the prices of related goods change. An increase in supply generally lowers the equilibrium price and raises the quantity sold. An increase in demand generally raises both the equilibrium price and quantity sold.