Law of Demand & Supply and Equilibrium

Law of demand:

According to the law of demand, when price of good is increased, then the quantity demand automatically decreases, provided we have ceteris paribus or caeteris paribus which means that other factors remains constant.

From the above you can see that if price of a product is increased from P1 to P2, then the quantity demand decreases from Q1 to Q2. This inverse relationship is explained by the law of demand.

Law of Supply:

According to the law of supply, if the price increases then the quantity supply also increases. This means that if the price of a product is increased, then the supplier would like to sell more in order to maximize their profit.

Demand and supply equilibrium:

The point where the demand curve and the supply curve intersect is known as demand and supply equilibrium. This the point which should decide the actual price of a product with respect to its quantity. At this point we have the best price of a product which can be bought by the consumer with good number of quantity and on the other hand supplier will have maximum profit.

Economies of Sales:

According to the economies of sales, the more you increase the scale of production the more you will utilize your average cost that is the average cost will decrease more till a certain point. After that certain point the average cost starts to increase because you now want to produce above your capacity which means you need to apply more fixed cost which is ultimately going to increase your average cost.