The Power of Supply and Demand

💡Supply and demand are fundamental economic principles that determine prices and quantities in the market.

📈When demand exceeds supply, prices tend to rise, while when supply exceeds demand, prices tend to fall.

💰The equilibrium point where supply and demand intersect represents the market clearing price and quantity.

📉Changes in supply or demand can shift the equilibrium and lead to price and quantity adjustments in the market.

🌍Supply and demand interact not only at the local level but also globally, affecting international trade and economies.

What is supply and demand?

—Supply and demand refer to the relationship between the quantity of a good or service that producers are willing to provide at various prices and the quantity that consumers are willing and able to buy at those prices.

How does supply and demand affect prices?

—When demand exceeds supply, prices tend to rise as buyers compete for limited goods. When supply exceeds demand, prices tend to fall as sellers try to attract buyers.

What is the equilibrium point?

—The equilibrium point is where the quantity demanded by consumers matches the quantity supplied by producers, resulting in a stable market price and quantity.

What happens when there is a change in supply?

—A change in supply can shift the equilibrium point, causing prices and quantities in the market to adjust. For example, an increase in supply can lower prices and increase quantity, while a decrease in supply can do the opposite.

How does supply and demand affect international trade?

—Supply and demand dynamics can impact international trade by influencing prices, quantities, and market conditions. Changes in supply and demand in one country can affect the global market and trade relationships.

00:14Introduction to the concept of supply and demand.

01:05Understanding the concept of supply.

01:19Explaining the concept of demand.

02:23The equilibrium point and market clearing price.

02:40How changes in supply and demand impact prices and quantities.