Supply and demand are two forces that make market economies work. They determine the quantity of each good produced and the price at which it is sold.
The demand curve shows how the quantity of a good demanded depends on the price. According to the law of demand , as the price of a good falls,the quality demanded rises. Therefore , the demand curve slopes downwards.
The supply curve shows how the quantity of a good supplied depends on the price. According to the law of supply , as the price of a good rises , the quantity supplied rises. Therefore, the supply curve slopes upwards.
The intersection of the supply and demand curves determines the market equilibrium price, the quantity demanded equals the quantity supplied.
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