Demand and Supply Analysis

Demand and supply analysis is a fundamental economic concept that examines how the quantity of a good or service consumers want (demand) interacts with the quantity producers are willing to sell (supply). When demand exceeds supply, prices tend to rise, signaling producers to make more. Conversely, if supply exceeds demand, prices tend to fall, encouraging consumers to buy more. This relationship helps determine market prices and quantities, reflecting consumers' preferences and producers' capabilities, ultimately guiding resource allocation in the economy. Understanding demand and supply helps explain fluctuations in markets and economic behavior.