What does the Y axis of the supply and demand curve indicate?

The Y-axis of the supply and demand curve indicates price. This axis is essential for understanding how price levels influence the supply of goods and the demand for those goods in a market. In the context of the supply and demand framework, as the price increases along the Y-axis, the quantity demanded typically decreases, while the quantity supplied usually increases. This relationship illustrates the fundamental economic principle of supply and demand, which helps to determine market equilibrium.

The concept of price represented on the Y-axis allows analysts and businesses to assess how changes in price affect consumer behavior and supplier decisions, ultimately influencing market dynamics. Understanding the role of price on this axis is critical for interpreting shifts in both the supply and demand curves, which are graphically represented in relation to price changes.