What principle suggests that the price of a good is influenced by its availability and desire?

The principle that suggests the price of a good is influenced by its availability and desire is known as the theory of supply and demand. This fundamental concept in economics describes how the interaction between buyers and sellers determines the price of a product.

When demand for a good increases and supply remains constant, the price tends to rise because consumers are willing to pay more to obtain the product. Conversely, if the supply of a good increases while demand remains constant, prices are likely to fall as sellers compete to attract buyers. Thus, the theory of supply and demand captures the essential relationship between market availability and consumer preferences, highlighting how they work together to shape prices in a market economy.

The other principles mentioned relate to different economic concepts. The relationship of price and income explores how consumers' purchasing power affects their ability to buy goods, while the law of diminishing returns focuses on how the addition of one factor of production, when one factor is fixed, eventually yields lower incremental returns. Lastly, the concept of opportunity cost involves the cost of forgoing the next best alternative when making a decision, which does not directly address price determination related to availability and demand.