Supply and demand determine prices from "summary" of Principles of Economics by Saifedean Ammous
The price of any good or service is ultimately determined by the interaction of supply and demand. This fundamental principle lies at the heart of market economics. When consumers demand a particular product or service, they are essentially indicating their willingness to pay a certain price for it. On the other hand, producers supplying that product or service are also indicating their willingness to sell it at a certain price. The price mechanism serves as the equilibrium point where supply and demand intersect. If the price is too high, consumers may decide not to purchase the product, causing a surplus and putting downward pressure on prices. Conversely, if the price is too low, producers may not find it profitable to supply the product, leading to a shortage and pushing prices up. In a competitive market, prices are constan...
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