Supply and Demand

Supply and demand is the fundamental concept of a market economy. It allows the level of supply of a given product, or how much is manufactured and offered for sale, and the demand for it, to determine the price of a product. If the supply for a given product exceeds the demand for it, then in order to sell the product, the manufacturers are most likely going to reduce the price, or put the product on sale to stimulate demand. In contrast, if the demand exceeds the supply, manufacturers can raise their prices.

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