supply and demand

1. 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.

Example Sentences

Until the picture around supply and demand becomes clearer, shareholders should expect more big swings ahead.

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Mathieu Verboud said that the growth in world production of cocaine had triggered an "explosion of supply and demand. The market has gone through the roof and so have the profits."

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A good illustration comes from some of the new trading markets that have recently gained prominence, such as prediction markets and cryptocurrencies, where pricing is complex, supply and demand fluctuate rapidly and continuously, and uncertainty is pervasive.

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That said, the analysts are constructive on the lithium market in the medium term, citing a widening imbalance between supply and demand.

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The economic law of supply and demand is simple enough, but Los Angeles is defying it again by tightening its rent control law in the name of housing affordability.

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