Supply and demand are two important ideas that work together to set prices in the market.
Demand: This is all about how much people want a product. For example, if everyone really wants the latest smartphone, the demand for it goes up.
Supply: This is about how much of a product sellers are ready to make available. If a company can make more smartphones, then the supply goes up.
When more people want a product than what is available, prices usually go up. On the other hand, if there is more of a product available than what people want, prices tend to go down.
Here’s a simple example: Imagine there’s a really popular toy during the holiday season, but not enough of them have been made. If the toy is supposed to cost 30.
This back-and-forth between supply and demand helps create a balance known as market equilibrium.
Supply and demand are two important ideas that work together to set prices in the market.
Demand: This is all about how much people want a product. For example, if everyone really wants the latest smartphone, the demand for it goes up.
Supply: This is about how much of a product sellers are ready to make available. If a company can make more smartphones, then the supply goes up.
When more people want a product than what is available, prices usually go up. On the other hand, if there is more of a product available than what people want, prices tend to go down.
Here’s a simple example: Imagine there’s a really popular toy during the holiday season, but not enough of them have been made. If the toy is supposed to cost 30.
This back-and-forth between supply and demand helps create a balance known as market equilibrium.