Describe two of the crucial assumptions made in the model of supply and demand, as discussed...
Describe two of the crucial assumptions made in the model of supply and demand, as discussed in your reader. What is your view of the supply and demand model, having worked with it for a few weeks?
Homework Answers
Ans) The four key assumptions made in supply and demand model are÷
- Market is homogeneous.
- Both supply and demand are for same and single market.
- Every unit is sold at same price and everyone has same amount of information.
- There are large number of consumers and sellers.
Demand and supply model is the basic concept in economics. It helps us understand the relationship between price and quantity supplied and quantity demanded.
Further this model serves as a simplistic view of real market and how consumers and sellers behave in a market. It also tells how equilibrium price is reached, which helps determine the allocation of resources.
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Describe two of the crucial assumptions made in the model of
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