What is meant by the term "supply and demand"?

The term "supply and demand" refers to a fundamental economic concept that determines the price of goods and services in a market. It describes how the quantity of a product supplied by producers and the quantity demanded by consumers interact with each other. When demand for a good increases while supply remains constant, prices tend to rise because more consumers are competing for the same quantity of the product. Conversely, if supply increases without a corresponding increase in demand, prices may drop as sellers compete to attract buyers.

This relationship illustrates how consumer desire (demand) and the availability of a product (supply) work together to influence market conditions and pricing. Understanding this concept is essential for analyzing market dynamics and making informed economic decisions.