Definition of ‘Law Of Supply And Demand’
A theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply and demand defines the effect that the availability of a particular product and the desire (or demand) for that product has on price. Generally, if there is a low supply and a high demand, the price will be high. In contrast, the greater the supply and the lower the demand, the lower the price will be.
Suzy from Salt Lake City writes and asks why it is that today there is a high supply of oil/gasoline and a lower demand, and yet, gasoline prices continue to rise?
Can you help explain this to Suzy?
