Home > Resources > Homework > Humanities

What are the basic principles of supply and demand in economics?

Answer 1

Sean Barnes

The basic principles of supply and demand in economics revolve around the relationship between the availability of a product (supply) and the desire for that product (demand). When demand exceeds supply, prices tend to rise. Conversely, when supply exceeds demand, prices tend to fall. Equilibrium is achieved when supply equals demand, stabilizing prices.