Question

The law of supply and demand relates to

a. the relative price of goods and services.
b. the rate of unemployment.
c. the income tax structure.
d. the presence of a monopoly.

Answer 1

A. The relative price of goods and services. The law of demand and supply explains the interaction between the supply and demand of a resource. The law of demand states that if all things are equal, the higher the price the lesser (quantity) the demand for the goods/services. While the law of supply states that if all things are equal, the higher the price, the higher the (quantity) supply of goods/services.