Supply & demand

Supply and demand are the two forces that set prices in a competitive market. The demand curve shows how much buyers will purchase at each price — usually more when it is cheaper; the supply curve shows how much sellers will offer — usually more when the price is high enough to be worth it. They meet at the equilibrium: the single price where the quantity buyers want equals the quantity sellers offer, leaving no shortage or surplus. When something shifts a whole curve — incomes, tastes, costs, or the number of sellers — the equilibrium moves. Price controls interfere: a ceiling below equilibrium creates a shortage, a floor above it a surplus. It is the foundation of almost all of microeconomics.