Define supply and demand

Supply and Demand is an economic model that describes how prices of commodities in an open competitive market naturally gravitate toward an equilibrium between the available supply for a commodity and the demand for that same commodity at any given time. In this model, supply is defined as the willingness of a producer to sell a commodity at a given price and terms, and demand is the willingness of a consumer to purchase that commodity at a given price and terms.

In principle, as supply increases, more of the commodity becomes available to consumers, and therefore the consumers have greater access to a wider range of sources of the commodity. In this circumstance, the commodity price falls. The commodity price can also fall when demand for that commodity weakens, forcing producers to "sweeten the deal" in order to attract buyers.

As supply decreases, price increases, because there is less of the commodity available on the market, and consumers must compete more aggressively with each other to purchase the same commodity. Price can also increase when demand increases, also creating increased competition for the commodity.

The supply and demand model seeks to identify and predict intersections between supply and demand curves, and thereby evaluate the current fair price for commodities, and to anticipate changes of the commodity prices.

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