How Does Supply and Demand: Crash Course Economics #4 Work?

Supply and demand is like when you’re trying to buy your favorite toy at a store, sometimes it’s easy, and sometimes it's tricky depending on how many people want it and how many are selling it.

Supply is how many of something are available. Imagine there are 10 ice cream trucks in town, that means lots of ice cream is being sold. That’s high supply.

Demand is how many people want something. If all your friends also want the same ice cream, that’s high demand.

Now imagine you're at an ice cream shop and only one truck is there (low supply), but everyone in school wants ice cream (high demand). That means the price of ice cream goes up, like when you have to pay extra for a limited-edition toy.

On the flip side, if there are 10 trucks (high supply) and not many people want ice cream (low demand), the price might go down, like when your favorite candy is on sale because the store has too much left.

When supply goes up and demand stays the same, prices usually go down.

When demand goes up and supply stays the same, prices usually go up.

It's like a game of tug-of-war, the more people pull (demand) and fewer trucks are there (low supply), the harder it is to get ice cream, and the more you might have to pay for it.