Which term describes the amount of a commodity available and the desire of buyers for it, considered as factors regulating its price?

Which term describes the amount of a commodity available and the desire of buyers for it, considered as factors regulating its price?

• A. Law of diminishing returns
• B. Supply and demand
• C. Fixed costs
• D. Variable costs

Answer: (B)

Supply and demand explain how the amount of a commodity available and buyers’ interest in it interact to determine price. When there is plenty of the product or when buyers aren’t eager to buy, prices tend to fall. When supply is limited or buyers want the product more, prices tend to rise. This interaction creates the market price. Other concepts focus on costs or production efficiency rather than how availability and buyer interest drive price changes.

Supply and demand explain how the amount of a commodity available and buyers’ interest in it interact to determine price. When there is plenty of the product or when buyers aren’t eager to buy, prices tend to fall. When supply is limited or buyers want the product more, prices tend to rise. This interaction creates the market price. Other concepts focus on costs or production efficiency rather than how availability and buyer interest drive price changes.