mytetz › Supply and Demand

Supply and Demand

Supply and demand describes how the price and quantity of goods in a market are determined by the interaction of two forces: how much sellers are willing to offer (supply) and how much buyers want to purchase (demand). Generally, as price rises, sellers offer more but buyers want less, and the point where these opposing forces balance is called the equilibrium—the price at which the quantity offered exactly matches the quantity desired. Shifts in either supply or demand, caused by things like changing costs or consumer preferences, push this balance point to a new price and quantity.