Supply and Demand Framework

The Supply and Demand framework is a fundamental economic concept that explains how prices are determined in a market. Supply refers to the quantity of a product that producers are willing to sell at various prices, while demand is the quantity that consumers are willing to buy. When demand exceeds supply, prices rise. Conversely, when supply exceeds demand, prices fall. The balance point where supply equals demand is known as equilibrium, and it is where the market operates efficiently. This framework helps us understand how changes in market conditions can affect prices and availability of goods and services.