Financial Terms / supply and demand

# Understanding Supply and Demand

The law of supply and demand dictates that changes in resource, commodity, and product prices determine their availability and demand.

## Formula

``Demand = Supply x Price``

## How do I calculate the supply and demand?

`When calculating the supply and demand of a product or resource, it is important to keep in mind the law of supply and demand. The law of demand states that the demand for a product or resource will decline as the price increases. To calculate the supply and demand of a product or resource, use the following formula: `Demand = Supply x Price`. It is also important to remember to use Sourcetable for your calculations.`

## What is the law of supply and demand?

`The law of supply and demand is an economic principle that explains how the price of a product or resource is determined by the balance between its availability and demand. In a market economy, increased supply of a product or resource will cause its price to decrease, while increased demand will cause its price to increase.`

## How do changes in price affect supply and demand?

`Changes in price will affect both the supply and demand of a product or resource. If the price of a product or resource increases, the demand for it will decrease, while the supply will increase. Conversely, if the price of a product or resource decreases, the demand for it will increase, while the supply will decrease.`

## Key Points

How do I calculate supply and demand?
`Demand = Supply x Price`
Law of Supply and Demand
The law of supply and demand describes how changes in the price of a resource, commodity, or product affect its availability and demand. This law explains how demand for a product or a resource changes as its price changes.
Price Impacting Availability
When the price of a resource or product increases, the availability usually decreases. This is because the higher price makes it less attractive to suppliers, so they will be less likely to produce or provide the resource or product.
Demand Changes with Price
As the price of a resource or product changes, the demand for it also changes. If the price goes up, the demand usually goes down as people are less likely to buy the product or resource due to the higher cost. Conversely, if the price goes down, the demand usually goes up, as people are more likely to buy the product or resource due to the lower cost.
Price and Quantity
The law of supply and demand implies that a higher price of a resource or product usually leads to a lower quantity being supplied, while a lower price usually leads to a higher quantity being supplied. This is because suppliers are more likely to produce more of a resource or product if the price is higher, and less likely to produce it if the price is lower.