Which explains the connection between the law of demand and excess demand?

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Tess Branch

20 September, 10:03

Which explains the connection between the law of demand and excess demand?

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Caroline Grant · Answer 1

The statement which explains the connection between the law of demand and excess demand is:

The law states that when the price decreases, it leads to a greater demand and limited supply, which occur during excess demand.

Demand refers to the number of products the buyers need and Excess demand means when the prices decrease, the demand for the products increases but having a limited supply creates leads to a rise in the market price. Supply tells the ability of the manufacturers to make the products or services.

Rayna Castaneda · Answer 2

The connection between the law of demand and excess demand is that law of demand states that it is stated that if the factors remain equal, the higher the price, the lesser consumer is going to be demanding for that good, whereas the excess demand is the exact opposite; the lower the price, the more demands you'll get.