The way supply and demand work together is super important in understanding how our economy functions. This balance helps decide prices and what’s available in the market.

1. Market Equilibrium:
   The equilibrium price is where the demand curve meets the supply curve. For example, in 2023, the average price of a home in the U.S. was about $364,000. This price is affected by how many homes are available, how many people want homes, and interest rates.

2. Shifts in the Curves:

   • Demand Increase: When people suddenly want more electric cars, the demand curve shifts to the right. For instance, Tesla noticed a big jump; their sales went up by 87% in the second quarter of 2021 compared to the year before because more people wanted to buy eco-friendly cars.
   • Supply Decrease: Sometimes things can go wrong, like when there's a shortage of computer chips. This can move the supply curve to the left, which means prices go up. In 2021, the auto industry made about 4.4% less money, mostly because they couldn’t get enough parts to make cars.

3. Price Elasticity:
   Price elasticity measures how much the amount of something that suppliers can provide changes when prices change. In a market where there’s high elasticity, if prices go up by 10%, suppliers might increase their output by more than 10%. This shows that suppliers can quickly react to changes in a competitive market.

These factors show how supply and demand work together to create a balance, reflecting what’s really happening in the economy.