Prices in a market tend to settle where the quantity sellers are willing to offer equals the quantity buyers are willing to take. Supply and demand is the framework that describes that relationship. The demand curve slopes downward: at higher prices, buyers want less. The supply curve slopes upward: at higher prices, sellers offer more. Their intersection is the equilibrium price and quantity.

Shifts in either curve change the equilibrium. An increase in demand (perhaps from rising incomes or changing tastes) raises both price and quantity. An increase in supply (from lower costs or new producers) lowers price and raises quantity. The model is simple yet powerful for understanding a wide range of market outcomes.

Real markets have frictions, regulations, and imperfect information that the basic model abstracts away. Still, the logic of supply and demand remains the starting point for analyzing why prices rise or fall and how markets respond to shocks. It is one of the most fundamental tools in economics and in practical business reasoning.