Supply and Demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers resulting in an economic equilibrium of price and quantity. This relationship of supply and demand can be seen in a plot of the classic supply-demand curve on the right. [1]

The Economic Concept of Supply [2]
Supply refers to the quantities of product manufactures or owners are willing to sell at different prices at a specific time.

The Economic Concept of Demand [2]
Demand refers to the quantity of product that people are willing to buy at different prices at a specific time.

The Equilibrium Point, or Market Price [2]
The market price is the intersection of the demand price and quantities of product manufactured.  This crossing point is known as the equilibrium point or price.

The four (4) basic laws of supply and demand are: [3]

  1. If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
  2. If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
  3. If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
  4. If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.

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