Market Theory

Market theory refers to the study of how economies function through supply and demand. It explains how prices are determined based on the availability of goods and how much consumers want them. When supply exceeds demand, prices tend to fall; when demand exceeds supply, prices usually rise. This theory also considers factors like competition, consumer preferences, and external influences that affect market behavior. Overall, market theory helps us understand the forces that drive pricing, production, and resource allocation in freely functioning markets, serving as a foundation for analyzing economic activity and making informed decisions.