Solution:

Supply and demand:

• Supply and demand, in economics, the relationship between the quantities of a the commodity that producers wish to sell at various prices and the quantity that consumers wish to buy.

• It is the main model of price determination used in economic theory.

• The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers of that resource. ...

• Generally, as price increases, people are willing to supply more and demand less and vice versa when the price falls.

• Equilibrium is the point where demand for a product equals the quantity supplied. This means that there's no surplus and no shortage of goods. A shortage occurs when demand exceeds supply – in other words when the price is too low.

• These are examples of how the law of supply and demand works in the real world. A company sets the price of its product at $10.00. No one wants the product, so the price is lowered to 9.00. Demand for the product increases at the new lower price point and the company begins to make money and a profit.

Supply and demand facts:

• The four basic laws of supply and demand are: If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity.

• If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity.

• If the demand increases, and the supply remains the same, there will be a shortage. ...

• If the demand decreases, and the supply remains the same, there will be a surplus. ...

• If the supply increases, and the demand remains the same, there will be a surplus and the price will go down.