Supply and Demand
The economic model that explains how prices are set in a market economy.
5 min readUpdated July 12, 2026
The two curves
The demand curve shows how much of a good buyers want at each price; usually higher prices lead to lower demand. The supply curve shows how much sellers will produce; usually higher prices increase supply.
Equilibrium
The price where supply meets demand is the equilibrium price. At that price, the quantity buyers want to buy equals the quantity sellers want to sell.
Shifts
Events like new technology, changing tastes, or regulation can shift the whole curve, moving the equilibrium to a new price and quantity.