SUPPLY AND DEMAND

"Supply and demand" refers to the idea that the price of a product is dependent on the amount of that product available to sell (the supply) and the desirability of the product to consumers (the demand). Sellers want high prices and buyers want low prices, and the strength of these conflicting desires will determine the price. In economic terms, supply refers to a schedule of quantities that people are willing to sell at different prices at a given time, and demand refers to a schedule of quantities people are willing to buy at different prices at a given time. The two terms in economics are linked together, like the terms "buyer" and "seller." The interaction between the supply of goods and services and the demand for them brings about a price, for each item and service, at which suppliers and demanders are willing and able to sell and buy the same quantity of goods. When the supply and demand are equal, the price of any product is said to be at an equilibrium price. The marketplace, the arena of business competition, is not only where the clash of interest between buyer and seller is worked out by the opposition of supply and demand, but it is also where buyers contend against buyers, and sellers against sellers. Supply and demand is always changing. Changes in willingness or ability to buy or sell are always occurring. The rise or fall of income alters the ability to buy. Fluctuations of desire or need alter the willingness to buy. On the seller's side, when the price of labor, land, or capital change, then the seller may alter his ability or willingness to offer his products on the markets at reduced or increased prices. Supply and demand in the marketplace is never a static phenomenon. The marketplace is always dynamic and changing, as supply changes, as demand changes, and as quantities of supplies and demands change.