Name : Raihan Al Mundzir

Npm : 2305102010032
Study : English For Agribussines
Class : 02
Lecturer : Dr. Elvira Iskandar, Sp., M.Sc

Basic Economics: Supply and Demand

1. The law of demand

The law of demand graph shows the relationship between the price of a product
and the quantity demanded by consumers. Basically, when the price goes down more
people will buy it, and when the price goes up, they are less likely to buy it. So, let's
say you like candy. If the price of candy becomes cheaper, you may want to buy a lot
of candy, but if the price becomes more expensive, you may only buy a small amount
of candy. That's why on a graph, the demand curve tends to slope downward and to the
right, indicating that as the price falls, the quantity demanded increases.

Points A, B, and C on the demand curve show the relationship between quantity
demanded (Q) and price (P). As price (P) decreases, quantity demanded (Q) increases
(point C), and vice versa (point A). This illustrates the negative correlation between
price and quantity demanded.

2. The Law of supply

The law of supply graph shows that when the price of a good rises, more people
want to sell it, and when the price falls, fewer people want to sell it. So, if someone has
a lot of gold, if the price of gold rises, he may want to sell more gold, but if the price
falls, he may only want to sell a little gold.
Points A, B, and C on the supply curve show the relationship between quantity supplied (Q)
and price (P). As price (P) increases, quantity supplied (Q) also increases (point B), and
so on.

3. Equilibrium
The equilibrium graph shows the point at which supply and demand meet,
meaning the quantity of goods sold equals the amount of goods purchased, and where
sellers and buyers agree on a price and quantity that satisfies everyone. Think of it like
a seesaw: if too many people want to buy something but there aren't enough of them,
the price will go up. However, if there are too many items available and not enough
people want to buy, then the price will drop. Equilibrium is the perfect place where the
seesaw is balanced, and everyone feels right at the price and quantity bought and sold.

On the graph, equilibrium occurs when the demand and supply curves meet, which does
not indicate any waste. Here, price (P) and quantity (Q) are exact, which is called
equilibrium price and quantity. In real life, achieving perfect equilibrium is rare, so
prices are constantly changing based on changes in demand and supply.