Supply and Demand

## The Forces That Shape Markets Supply and demand are the backbone of market economies. They determine prices and quantities of goods and services. ### Demand: What Buyers Want Demand is how much of a good or service people are willing and able to buy at different prices. When prices go up, people usually buy less. When prices go down, people buy more. ### Supply: What Sellers Offer Supply is how much of a good or service sellers are willing and able to produce at different prices. Higher prices often mean producers want to make and sell more. ### The Market Equilibrium The magic happens where supply meets demand—the equilibrium price. At this price, the amount buyers want to buy equals the amount sellers want to sell. ### Shifts in Supply or Demand Changes in factors like income, tastes, or production costs can shift supply or demand, changing the market price and quantity. ### Why It Matters Understanding supply and demand helps explain why products go on sale, why prices change, and how markets work around us every day.