The theory of supply and demand explains how the price and quantity of goods or services are determined in a market economy through the relationship between suppliers and consumers. It highlights how the amount of a product that producers are willing to sell (supply) interacts with the amount consumers are willing to purchase (demand) to establish market equilibrium, where supply equals demand. Understanding this theory is essential for analyzing various economic activities, such as pricing strategies in gallery business models and regional variations in art market dynamics.
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