Supply and Demand in Trade

Supply and demand is a fundamental economic concept that explains how prices are determined in trade. Supply refers to how much of a product or service is available, while demand indicates how much people want that product or service. When demand exceeds supply, prices tend to rise, as buyers compete for limited goods. Conversely, if supply is greater than demand, prices usually fall. This interaction helps balance the market, guiding producers on how much to create and consumers on what to buy, ultimately influencing economic health and resource allocation.