Microeconomics Summary paper Term Example | Topics and Well Written Essays - 1500 words

Microeconomics Summary - Term Paper Example gather up relationship is the association between the amount asked and the price it is demanded at. Supply and demand atomic number 18 expressed in terms of the price (J. R. Adil, 2006).The force which distri thates the resources is triggered by the correlation of supply and demand. The theories involved in market economy suggest that the supply and demand theory can distribute the resources in a highly efficient manner. To see how that happens we provide study closely the laws of supply and demand.According to the Law of Demand, considering all the other factors to remain constant, the price of a good is antonymly proportional to its demand. If the price of a good is increased than less people would fatality it and if the prices are decreased then more people will want to buy the good. With the increase in price of a good or service, at that place is an increase in the opportunity cost of the purchase of that particular good or servi ce and that is why less people buy that good. This will head in people not buying goods which will cause them to abstain from using goods which are more valuable to them. As shown in the graph below, the warp is a downward slope.The curve of demand has three points on it which are A, B and C on it. On the curve, the relationship between price (P) and bill (Q) is being directly represented at each point. So the quantity and price at point A will be Q1 and P1 respectively, and so on. The inverse relation between the price and quantity demanded is evident from the curve. At A the price is high therefore the demand is lower whereas at C, the demand is higher and the price is lower (Economics Basics Supply and Demand, 2003).The law of supply exhibits those quantities which are sold at fixed prices similar to that in the Law of Demand, but the slope in the law of supply is upward. This means that the price and the amount supplied are directly proportional to each other. Higher the pri ce higher will be the supply.