The Law of Supply and Demand

The Law of Supply and Demand describes how prices are determined in a market. When more of a product is available (high supply) and fewer people want it (low demand), prices tend to fall. Conversely, if a product is scarce (low supply) and many want it (high demand), prices usually rise. This balance between supply and demand helps ensure that goods and services are allocated efficiently. Essentially, prices adjust to reflect the availability of a product and the desire of consumers, guiding producers to supply what is needed and consumers to buy according to their preferences and resources.