Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity.
The four basic laws of supply and demand are:
- If demand increases and supply remains unchanged, a shortage altogether, thus leads to a higher equilibrium price.
- If demand decreases and supply remains unchanged, a surplus altogether, thus leads to a lower equilibrium price.
- If demand remains unchanged and supply increases, a surplus altogether, thus leads to a lower equilibrium price.
- If demand remains unchanged and supply decreases, a shortage altogether, thus leads to a higher equilibrium price.
Famous quotes containing the words supply and demand, supply and/or demand:
“Artistic inspiration ignores the law of supply and demand.”
—Mason Cooley (b. 1927)
“There never has been a time in our history when work was so abundant or when wages were as high, whether measured by the currency in which they are paid or by their power to supply the necessaries and comforts of life.”
—Benjamin Harrison (18331901)
“There is nothing funny about Halloween. This sarcastic festival reflects, rather, an infernal demand for revenge by children on the adult world.”
—Jean Baudrillard (b. 1929)