What is supply and demand?


Supply and demand are economic terms in a free-market economy that dictate the price of a good or service. Typically shown on a two-dimensional axis where y is price and x is the quantity, the price of a particular good or service is when the two linear lines intersect. Supply has a negative sloping line indicating that when demand is fixed an increase in quantity of a good or service results in a lower unit price of that good or service. Demand has a positive linear line meaning that has more demand for a good or item increases while supply remains fixed then the price for that good or service increases.