Answer to Question #187067 in Microeconomics for Mayank

Question

how supply , demand and price affect the consumer how wants to buy a car and how the compitition among the seller affect the price. how a consumer buy the car at resonable price

Answer 1

1) How supply, demand and price affect the consumer who wants to buy a car.

The law of supply and demand explains the relationship between supply and demand and how the relationship affects the price of goods and services. Therefore, if a consumer who wants to buy a car, and the number of cars supply exceeds the demand for car the price of the car will fall. However, if the demand for the car exceeds the number of supply of the cars the price of the car will rise. If, the demand for the car remains unchanged, the supply of the car will increase while the the price of the car will fall below the equilibrium. Therefore, if demand of the car increases and the supply remains unchanged the price will rise above the equilibrium.

2) How the competition among sellers affect affect the price.

Competition among the sellers of the car will lower the price of the car. Thus, competition will encourage production of more cars that the consumers are willing to buy. Therefore, higher production of cars will lower the price of the car.

3) How a consumer can buy the car at a reasonable price.

Equilibrium price and equilibrium quantity occurs if the number of cars demanded is equal to the number of cars supplied. Meaning, the price of the car is at equilibrium.