why there is positive correlation between supply and price negative correlation between demand and price?

Open in App

Solution

Hey Lavanya,

There is positive correlation between supply and price because when the price of a commodity rises (or falls), then the quantity supplied will increase (or decrease), other things remaining unchanged (this is as per law of supply). On the other hand, there is negative correlation between demand and price because when the price of a commodity rises (or falls), then the quantity demanded will increase (or decrease), other things remaining unchanged (this is as per law of demand).

Suggest Corrections

Similar questions

The demand for a good at different price points is given in the below. Find the correlation coefficeint between price and quantity demanded.

$\begin{matrix} Price (P) & Quantity (Q) 10 & 120 20 & 105 30 & 85 40 & 55 50 & 40 \end{matrix}$

Price (₹)	10	14	12	11	9	7	15	16	18	20
Quantity (kg.)	25	20	30	32	35	40	19	16	12	10

Join BYJU'S Learning Program