The Law of Supply and Demand

The Law of Supply and Demand

Changes in supply and demand effect the price of a commodity. There are 4 simple changes: An increase in demand will lead to a shortage of a good and an increase in price; a decrease in demand will lead to a surplus of a good and a decrease in price; an increase in supply will lead to a decrease in demand and decrease in price; a decrease in supply will lead to an increase in demand and an increase in price. These changes are short term only because over time supply and demand will balance. [JP] {EC}