marketplace theory

Marketplace theory refers to the way goods and services are exchanged in an economy, focusing on how supply and demand interact to determine prices. In this context, a "marketplace" is any setting where buyers and sellers come together. When demand for a product increases, prices tend to rise, encouraging producers to supply more. Conversely, if demand drops, prices fall, which can lead to a decrease in supply. This dynamic helps allocate resources efficiently, guiding businesses in decision-making while responding to consumer preferences and market conditions.