How do supply and demand influence market price in a competitive market environment?

In a competitive market environment, supply and demand interact to determine the market price of goods and services. When demand for a product increases while supply remains constant, prices typically rise as consumers compete for the limited quantity available. Conversely, if supply exceeds demand, prices tend to fall as sellers lower prices to attract buyers. This dynamic balance continues until the market reaches an equilibrium price where the quantity supplied matches the quantity demanded.