Law of Supply and Demand

The Law of Supply and Demand describes how prices are determined in a market. When demand for a product increases and supply remains the same, prices tend to rise because more people want it. Conversely, if demand drops or supply increases, prices tend to fall. Essentially, high demand with limited supply drives prices up, while low demand or abundant supply pushes prices down. This interaction helps balance markets over time, guiding producers and consumers in their decisions.