Supply and Demand

Definition

Supply and demand is an economic model that explains how prices are determined in a market. It analyzes the relationship between the quantity supplied by producers and the quantity demanded by consumers at various price levels.

Related terms

Equilibrium Price: The equilibrium price is the market price at which quantity supplied equals quantity demanded, resulting in no shortage or surplus.

Elasticity: Elasticity measures how responsive quantity demanded or supplied is to changes in price, income, or other factors.

Market Forces: Market forces refer to factors such as supply, demand, competition, and government policies that influence prices and quantities in a market economy.