Definition, Meaning & Synonyms
law-of-supply-and-demand
noun
/lɔː əv səˈplaɪ ənd dɪˈmænd/
Definition
The law of supply and demand is an economic principle that describes how the price of a good or service is determined by the relationship between its supply and the demand for it.
Examples
- The law of supply and demand explains many real-world economic phenomena.
- When more people want to buy food, the law of supply and demand causes prices to rise.
- During the holiday season, the law of supply and demand can lead to increased prices for popular gifts.
Meaning
This law asserts that when the supply of a good increases while demand remains constant, prices tend to fall. Conversely, if demand increases without a corresponding increase in supply, prices tend to rise.
Synonyms
- market dynamics
- economic principles
- pricing theory
