supply and demand


In classical economic theory, the relation between these two factors determines the price of a commodity. This relationship is thought to be the driving force in a free market. As demand for an item increases, prices rise. When manufacturers respond to the price increase by producing a larger supply of that item, this increases competition and drives the price down. Modern economic theory proposes that many other factors affect price, including government regulations, monopolies, and modern techniques of marketing and advertising.

QUIZZES

DO YOU KNOW THIS VOCABULARY FROM "THE HANDMAID'S TALE"?

"The Handmaid's Tale" was required reading for many of us in school. Everyone else has probably watched the very popular and addictive TV show. Do you remember this vocabulary from the book, and do you know what these terms mean?
Question 1 of 10
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The New Dictionary of Cultural Literacy, Third Edition Copyright © 2005 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

Example sentences from the Web for supply and demand

  • Supply-and-demand is not the one Law of Nature; Cash-payment is not the sole nexus of man with man,—how far from it!

    Past and Present|Thomas Carlyle
  • Laissez-faire, Supply-and-demand,—one begins to be weary of all that.

    Past and Present|Thomas Carlyle