laws of supply and demand
The law of supply:It means whenever the income of the producers increase,the ability to produce more good is possible.
Example:If many people are buying your product,your are likely to produce more
The law of demand:If the price of a certain good increase,then the Demand of consumers will decrease.
Example:If you increase a price from your product,for example oil,instead of selling it for 8dollar,you sell it for 10 dollar,which in fact will decrease the consumer wanting to buy it.
Veblen good:If Demand rises,therfore the price rises too,because the majority of people would think that if you buy something more expensive,you will get something that is more high quality,something that will last for a while.
Example:Instead of buying a cheap car from europe,some rich people are more likley to buy the luxury cars,because they are more reliable.
Giffen good:When the price of the good increase,then the demand rises,if the price decreases then the demand will decrease too.
Example:Comparing two goods,for example if people buy more rice instead meat.Because the prices of both are the same but the quatity you get is different.for instance if you buy meat for a 2 dollars,you get 200g,but if you buy a bag of rice for 2 dollar,you get 1kg,Therefore the poor will buy more rice.
