Law of

Supply & Demand

12th Astha Pandey
Commerce F Y B.Ed
Roll No. : 34
What Is the Law of Supply and Demand?
It is the interaction between the sellers of a resource and the buyers for
that resource. The theory defines the relationship between the price of a
given good or product and the willingness of people to either buy or sell it.

The theory is based on two separate "laws," the law of demand

and the law of supply.

Generally, as price increases, people are willing to supply more

and demand less and vice versa when the price falls.

The two laws interact to determine the actual market price and
volume of goods on the market.
27-03-2022 ASTHA PANDEY 2
 Definition of 'Law Of Demand
• The law of demand states that other
factors being constant ,price and quantity

Definition: demand of any good and service are

inversely related to each other.
• When the price of a product increases, the
demand for the same product will fall.

• Law of demand explains consumer choice

Description behavior when the price changes.

• In the market, assuming other factors

: affecting demand being constant, when

the price of a good rises, it leads to a fall in
the demand of that good.
27-03-2022 ASTHA PANDEY 3
Definition of 'Law Of Supply'
• Law of supply states that other factors
remaining constant, price and quantity supplied
of a good are directly related to each other. In
other words, when the price paid by buyers for a
Definition: good rises, then suppliers increase the supply of
that good in the market.

Law of supply depicts the producer behavior at

the time of changes in the prices of goods and
Description: services. When the price of a good rises, the
supplier increases the supply in order to earn a
27-03-2022
profit because
ASTHA PANDEY
of higher prices. 4
 Price
Fluctuations Related
video:

Factors That
Income and Affect Trends
Credit
Supply &
Demand

Commercia
l
Advertising

27-03-2022 ASTHA PANDEY 5

 Market Equilibrium
• Market Equilibrium is the situation of
equality between two opponents forces
market demand & market supply of a
commodity that determines equilibrium
price & quantity.
• A position at which two opponent forces
are intersect at a point is called
equilibrium.
Conclusion: Supply and demand have
an important relationship because together
they determine the prices and quantities
of most goods and services available in a
27-03-2022 given market.
ASTHA PANDEY 6
 Recap:
What is Law of Supply and Demand?

Definition of “Law of Demand”

Definition of “Law of Supply”

Factors that affect demand and supply

Related video

Market Equilibrium

Conclusion
27-03-2022 ASTHA PANDEY 7
Assignment
Q1: What is the law of supply and demand?
Q2: Write short note on market equilibrium.
Q3: Fill in the blanks?
a) The _____________ between the sellers of a resource and the
buyers for that resource is called law of supply and demand.
b) When the price of a product___________, the demand for the
same product will fall.
c) When the price paid by buyers for a good rises, then suppliers
___________ the supply of that good in the market.

27-03-2022 ASTHA PANDEY 8

References:
https://economictimes.indiatimes.com/definition/law-of-supply
https://economictimes.indiatimes.com/definition/law-of-demand
https://kullabs.com/class-12/economics-1/elasticity-&-it%27s-measurement/c
oncept-of-demand-&-supply

https://www.youtube.com/watch?v=720uyg0Dd_M

27-03-2022 ASTHA PANDEY 9