Market demand is best defined as each consumer’s demand for a particular product, or each firm’s demand for a particular factor. The law of demand specifies that ‘the amount demanded vary inversely with price’. An increase in price results in a decrease in demands. This is known as contraction in demand (or a decrease in the quantity demanded). Conversely, if the price falls, then there is an expansion in demand (or an increase …showed first 75 words of 508 total…

…showed last 75 words of 508 total…shown market equilibrium. This is the point where at a certain price level, supply and demand are equal. If the price is above the equilibrium, then there will be an excess of supply and a shortage of demand. If the price is below the equilibrium price, then there is an excess of demand. If market equilibrium is not met, then there will be an excess of supply and a shortage of demand or vice versa.