Demand and Supply (economic model)

Demand and supply are fundamental economic concepts that explain how markets function. Demand refers to how much of a product or service consumers want and are willing to buy at various prices. Usually, as prices go down, more people want to buy it; as prices rise, demand decreases. Supply describes how much producers are willing to produce and sell at different prices—typically, higher prices motivate producers to supply more. The interaction of demand and supply determines the market price and quantity of goods sold. When they balance, the market reaches an equilibrium where supply equals demand.