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Explain the law of supply and demand?
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The law of supply and demand is an economic law which states that the price of a product or service is determined by the balance between the amount that suppliers are willing to sell for, and the amount that consumers are willing to buy for. This means that when the demand for a good or service increases, the cost of it increases as well. Conversely, when the demand falls, prices drop as well. The law of supply and demand offers a powerful insight into market dynamics and its influence can be seen in nearly every economic decision made. In its simplest form, the law states that as price increases, supply increases and demand falls resulting in a decrease in price.