Supply and demand is like a game between people who want things and the people who make them. If everyone wants something, but not enough of it is made, that thing becomes expensive. If there are way more of something than people want, it becomes cheap. It’s as simple as that!
Imagine you’re at a lemonade stand in summer, demand is high because everyone is thirsty. But if only one person makes lemonade, the price gets really high. Now imagine it's winter and no one wants lemonade, there are more cups than people who want them, so the price drops.
This game between buyers and sellers happens every day in stores, markets, and even online.
Examples
- When there's more supply, such as a lot of apples at the farmer’s market, their price drops because you can easily find them everywhere.
- Demand increases when your favorite snack goes on sale, now you want to buy more than just one bag.
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See also
- Why Do We Have Different Kinds of Taxes?
- Why Do Prices Change So Much?
- Why Do We Use Money Instead of Bartering?
- Why Do Prices Go Up So Much When There's a Shortage?
- Why Do We Have Different Kinds of Coins?