Question

Which one of the following statements defines the Say's Law of Market?

• A. Supply creates its own demand.
• B. Everything else being equal, producers offer to sell more of a product at a higher price than at a lower price.
• C. Everything else being equal, consumers buy more of a product as its price falls and less as its price rises.
• D. Aggregate supply in a market is always equal to aggregate demand.

Hint:

Say’s Law: Production (supply) creates the income to buy goods (demand).

Answer 1

The Correct Option is A

Say’s Law of Market, proposed by Jean-Baptiste Say, is a classical economic principle stating that supply creates its own demand (option 1). The idea is that the act of producing goods and services generates income (e.g., wages, profits) sufficient to purchase those goods, ensuring that total supply creates equivalent demand in the economy.
- Option (2) describes the law of supply, where higher prices incentivize greater production.
- Option (3) describes the law of demand, where lower prices increase consumer purchases.
- Option (4) refers to market equilibrium, not Say’s Law, as the law does not guarantee constant equality but suggests supply generates demand.
Thus, option (1) is correct.