Financial Terms / S - T / Supply and Demand

Supply and Demand

In the free market, supply and demand are the economic forces that determine what and how many goods/services the suppliers are willing to produce and what buyers/customers are willing and able to pay for.

The prices of the various good and services in the open market are determined by the supply and demand balance for that particular product. If the supply is low and demand is high, prices rise, and if demand is low and the supply is high, prices fall.