How does the law of supply and demand affect market prices and consumer behavior?
Answer 1
Crystal Nelson
The law of supply and demand states that the price of a good or service is determined by the relationship between its availability and the desire for it. When demand exceeds supply, prices rise, encouraging producers to increase production and consumers to reduce consumption. Conversely, when supply exceeds demand, prices fall, encouraging increased consumption and reduced production. This dynamic equilibrium influences market prices and consumer behavior, ensuring resource allocation efficiency.
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