Paper # 1.

Explain what is law of supply and law of demand

Law of Supply

The Law of Supply states that, all else equal, an increase in the price of a

good will increase the quantity supplied, and conversely for a price

decrease.

Tomato farm

In our locality, consider the supply of fresh produce like tomatoes. When
the price of tomatoes rises due to factors like poor weather or increased demand, local
farmers tend to plant more tomato crops in the following season, increasing the
quantity supplied.

Law of Demand

The Law of Demand states that, all else equal, an increase in the price of

a good will decrease the quantity demanded, and conversely for a price

decrease.

Public Transportation

Think about the demand for public

transportation. If the local government raises bus fares, fewer people may choose to
use buses, opting for alternative modes of transportation or reducing their overall
travel.
Conversely, if bus fares are reduced, more people may opt to use buses for their daily
commute, increasing the quantity demanded.