Final answer:
Supply and demand interact to influence prices. Changes in supply affect price by shifting the supply curve, impacting the quantity and cost of goods or services in the market.
Explanation:
Supply refers to the amount of a product offered for sale at various prices. The Law of Supply states that more is offered at higher prices and less at lower prices. Changes in supply are influenced by factors like costs, productivity, technology, taxes, and government regulations.
When supply changes, it impacts price by shifting the supply curve. An increase in supply shifts the curve to the right, leading to lower prices and higher quantities available in the market. Conversely, a decrease in supply shifts the curve to the left, resulting in higher prices and lower quantities.
Understanding how supply changes affect price is crucial in analyzing market dynamics and determining equilibrium points that balance supply and demand.
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