Supply and Demand
Definition
Supply and demand refers to the concept in economics where the quantity of a good or service that producers are willing to sell (supply) matches the quantity that consumers are willing to buy (demand). It is influenced by factors such as price, availability, and consumer preferences.
Analogy
Think of supply and demand like a seesaw. When there is high demand for a product but low supply, the seesaw tips towards the sellers who can increase prices. On the other hand, when there is low demand but high supply, the seesaw tips towards buyers who can negotiate lower prices.
Related terms
Equilibrium: The point where supply equals demand in a market, resulting in stable prices.
Surplus: When the quantity supplied exceeds the quantity demanded, leading to excess inventory.
Shortage: When the quantity demanded exceeds the quantity supplied, resulting in insufficient goods or services available.
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