An increase in the price of cotton, an input in t-shirt production, would the market's sales and purchases of T-shirts will decline.
Equilibrium in the context of markets occurs when supply and demand are balanced, causing prices to stabilize. A technological advancement that reduces the product's marginal cost of production will boost the amount of goods available on the market. Surplus and shortage: If the market price is higher than the equilibrium price, there is a surplus since there is more supply than demand. Market value will decrease.
While the supply curve depicts a direct correlation between price and amount delivered, the demand curve depicts an inverse link between price and quantity desired.
According to the law of demand, a lower price results in a bigger amount demanded whereas a higher price results in a lower quantity demanded. Tools used to characterize the relationship between quantity desired and price are demand curves and demand schedules.
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