Supply and Demand

The law of demand states that, all else being equal, as the price of a good or service increases, the quantity demanded decreases, and vice versa, showing an inverse relationship between price and quantity demanded.

A downward-sloping curve showing inverse price-quantity relationship.

A demand schedule is a table that shows the quantity of a good or service that consumers are willing and able to buy at various prices during a specific period, forming the basis for plotting the demand curve.

An upward-sloping curve showing positive price-quantity supplied relationship.

The law of supply states that, all else being equal, as the price of a good or service rises, producers are willing to supply more of it, showing a direct (positive) relationship between price and quantity supplied.

Quantity where quantity demanded equals quantity supplied.

Market equilibrium is the point at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in a stable market price known as the equilibrium price, with no tendency for price to change.

A luxury good whose demand rises as its price increases.