How Does Introduction to Supply and Demand Work?

Supply and demand is like when you and your friends want to buy the same toy at a store, it decides how much the toy will cost.

Supply means how many toys are available in the store. If there are lots of toys, that’s more supply.

Demand means how many people want to buy the toy. If many kids want it, that’s more demand.

If the store has a lot of toys (high supply) and not many kids want them (low demand), the toy might be cheaper, like when you can buy candy for just 50 cents because there are plenty of candies and not many people are buying.

But if the store only has a few toys (low supply) and lots of kids want them (high demand), the toy might be more expensive, like when you have to pay extra for the last cookie at the bakery because everyone wants it!

It’s like playing a game with your friends, where what you all want and how much there is changes the price. Simple, right?