Definition:

Supply and demand is an economic principle that explains how the price of goods and services is determined in a market.

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Supply:

The amount of a product businesses are willing to sell.

Example:

A company produces 10,000 smartphones.

Higher supply usually lowers prices.

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Demand:

The number of consumers willing to buy a product.

Example:

20,000 people want to buy those smartphones.

Higher demand usually increases prices.

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When Demand > Supply

Prices rise because more people want limited products.

Example:

Concert tickets

Limited sneakers

Housing markets

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When Supply > Demand

Prices fall because businesses need buyers.

Example:

Season-end clothing sales

Excess food inventory

Unsold electronics

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Real World Impact:

Fuel prices

House prices

Food costs

Fashion trends

Stock prices

All are influenced by supply and demand.

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Key Takeaway:

Price is often determined by the balance between how much people want something and how much of it is available.