What Is The Supply And Demand Curve?
Supply curve shows the relationship between quantity supply and price. Whenever there is a change in the price of good or service, then the quantity supply will also changes. Supply curve shows that there is direct relation between price and quantity supply i.e, when price increases quantity supply also increases and vice versa. This is so because increase in the price shows high profit margin from producer’s point of view, thus quntity supply increases, on the other hand if price falls producer discourages as profit margin decreases, as a result quantity supply decreases. Demand curve shows the relationship between price and quantiy demanded. When price changes, qunatity demanded also changes. Demand curve is negatively sloped that shows the inverse relationship between price and demand i.e, increase in the price decreases quantity demanded and vice versa. Also Demand curve shows cunsumer’s rational behaviour.
