Supply and demand determine prices in a market economy from "summary" of The Economics Book by DK
Supply and demand are the forces that interact to determine prices in a market economy. When the supply of a good or service exceeds the demand for it, prices tend to fall. Conversely, when demand exceeds supply, prices tend to rise. This relationship between supply and demand is at the heart of how prices are determined in a market economy. The supply of a good or service is influenced by factors such as the cost of production, technology, and the number of suppliers in the market. For example, if the cost of producing a particular good decreases, suppliers may be willing to offer more of that good at a lower price. On the other hand, if the cost of production increases, suppliers may reduce the amount of that good they are willing to supply, leading to higher prices. Demand, on the other hand, ...
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