Question

(3 Marks) Say's Law states that supply creates its own demand. What does this mean?

Answer 1

Says Law of Market is the core of the classical theory. Say’s law states that aggregate production necessarily creates an equal quantity of aggregate demand. The classical economist JB Say was the first economist to systematize the law of the market.

In simpler terms, “Supply creates its own demand” has been attributed to Say’s Law of Market.The logic behind this law is that the supply of good itself generates sufficient income to generate a demand equal to the supply of the good. There cannot be any general overproduction or general unemployment in the economy as whatever is produced is automatically consumed. In other words, every producer who brings goods to the market does so only to exchange them for other goods.