What is the relation between supply and demand?

Supply and demand are two fundamental concepts in economics that are closely related to each other.

In simple terms, supply refers to the quantity of goods or services that producers are willing and able to offer for sale at a given price, while demand refers to the quantity of goods or services that buyers are willing and able to purchase at a given price.

The relationship between supply and demand is inverse. When the supply of a particular good or service increases, assuming that demand remains constant, the price of that good or service tends to decrease. Conversely, when the supply of a particular good or service decreases, assuming that demand remains constant, the price of that good or service tends to increase.

Similarly, when the demand for a particular good or service increases, assuming that supply remains constant, the price of that good or service tends to increase. Conversely, when the demand for a particular good or service decreases, assuming that supply remains constant, the price of that good or service tends to decrease.

Therefore, the equilibrium price of a good or service is the point at which the quantity of that good or service supplied is equal to the quantity of that good or service demanded, and it is determined by the intersection of the supply and demand curves.