What is demand and supply?

Demand and supply are economic concepts that describe the relationship between the quantity of a good or service that consumers are willing and able to purchase (demand) and the quantity of that good or service that producers are willing and able to supply (supply) at a given price.

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices. The law of demand states that as the price of a good or service decreases, the quantity demanded will increase, and vice versa. This relationship is typically represented by a downward-sloping demand curve.

Supply, on the other hand, refers to the quantity of a good or service that producers are willing and able to supply at various prices. The law of supply states that as the price of a good or service increases, the quantity supplied will also increase, and vice versa. This relationship is typically represented by an upward-sloping supply curve.

The interaction of demand and supply in a market determines the equilibrium price and quantity of a good or service. When the quantity demanded equals the quantity supplied at a particular price, the market is said to be in equilibrium. Changes in demand or supply can lead to shifts in the equilibrium price and quantity in a market.