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The Law of Demand
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The “Law of Demand” says that output increases when price falls, all else equal. That is, demand curves slope downward. But sometimes we see the price of a good rise when output increases. For example, lithium is used in rechargeable batteries for computers, phones, other electronic goods, and even certain cars. Demand for lithium was low as recently as the early 2000s. Since then, both the price of lithium and the production of lithium have more than doubled.
Start your discussion post by responding to this question:
- What could explain the simultaneous increases in the price of lithium and the production of lithium? Use supply and demand curves to explain your answer. (Hint: Price and equilibrium quantity have both increased. Would a shift in the demand curve or a shift in the supply curve lead to this result?)
Talk with your classmates:
- Reply to a classmate. Was his or her reasoning similar to yours?
For more information, see my video on Supply and Demand:
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