Supply and demand are important ideas in economics that help us understand how markets work.

What is Supply?

• Supply: This is the amount of a product or service that sellers are willing to sell at different prices.
• Law of Supply: When prices go up, sellers usually want to supply more.

What is Demand?

• Demand: This is the amount of a product or service that buyers want to purchase at different prices.
• Law of Demand: When prices go down, buyers tend to want to buy more.

Equilibrium

• Market Equilibrium: This happens when the amount supplied equals the amount demanded.
• The equilibrium price is where the supply and demand meet, keeping the market balanced.

Statistics in Action

• For example, if more people want apples because they want to be healthier, demand might go up by 20%.
• If sellers can’t keep up, the price might rise by 15%.
• According to the Law of Supply and Demand, prices will keep rising until a new balance is found.

Application

Knowing about supply and demand helps us understand the economy better. It can explain changes in prices, jobs, and what people buy, which is useful for both the government and individuals.