Answer: Changing prices affect supply and demand because when this factor changes it will also change the demand of the product or service and the supply of it .
Step-by-step explanation:
The supply and demand has 3 points to have in account :
- When, at the current price, demand exceeds supply, the price increases. Conversely, when supply exceeds demand, the price decreases.
- An increase in price, demand decreases sooner or later and supply increases. Conversely, a decrease in price increases demand sooner or later and decreases supply.
- The price tends to the level at which demand equals supply.
The law of the offer indicates that the offer is directly proportional to the price; The higher the price of the product, the more units will be offered for sale. On the contrary, the law of demand indicates that the demand is inversely proportional to the price; The higher the price, the less consumers will demand. Therefore, supply and demand vary the price of the good.
If the price of a good is too low and consumers demand more than producers can put on the market, there is a shortage situation, and therefore consumers will be willing to pay more. Producers will raise prices until the level at which consumers are not willing to buy more is reached if the price continues to rise. In the reverse situation, if the price of a good is too high and consumers are not willing to pay it, the tendency will be for the price to fall, until the level at which consumers accept the price is reached and everything can be sold .