All other factors remaining the same, the law of demand states that there is an inverse relationship between the price of a commodity and its quantity demanded. I.e. the demand for a commodity falls when its price rises and vice versa. On the other hand, the law of supply states positive relations between quantities supplied and price of a commodity, all other things remaining the same I.e. the supply of a commodity falls when its price falls and vice versa.

Both laws show the direction of change in demand and supply due to a change in price. But, they do not explain how much quantity will change with respect to change in price. This can be explained by the elasticity of demand and supply.

Please leave your comment

If this article has helped you, please leave a comment.

Previous Article Next Article