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Username: Fluffy

Rating:
Guru Stars

Asked to: Goro Yang

Date Created: 29 Jan 2019
Category 28
Tag Financial
Question What is the Law of Supply and Demand?
Advice from Guru
Hi Fluffy,

The law of supply and demand is a theory that explains the interaction between the supply of a resource and the demand for that resource. The theory defines the effect that the availability of a particular product and the desire (or demand) for that product has on its price. Generally, low supply and high demand increase price. In contrast, the greater the supply and the lower the demand, the price tends to fall.

The law of supply and demand, one of the most basic economic laws, ties into almost all economic principles in some way. In practice, supply and demand pull against each other until the market finds an equilibrium price. However, multiple factors can affect both supply and demand, causing them to increase or decrease in various ways.

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