Supply and demand

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Overview

Supply and demand is a basic principle of any market or economy anywhere. The basic understanding is this, certain goods or services may be in a "high" or "low" demand, while also being in a "high" or "low" supply. These factors help to greatly influence the value of these goods and services. Understanding this concept is a foundation to making more money in any economy or market.

Supply

Supply is the measure of how much the Quantity of a good or service exists in a given Local Economy. High quantity mean there is high supply and low quantity is low supply. Generally, high supply drives prices down while low supply drives prices up.

Demand

Demand is the sense of desire that a given Local Economy has for a particular good or service. The more the population "wants" the good or service the higher the demand. Demand may rise due to a large population desiring the good or service, or even a small group desiring large quantities of the good or service. In general, the higher the demand the higher the prices, and the lower the demand, the lower the prices.

Price Influence

After understanding Supply and Demand, a general correlation can be drawn, represented by this table below.

Supply/Demand Price Comparison
Demand Supply Price
High High Average
High Low High
Low Low Average
Low High Low

Generally the price given is the result of the Demand and Supply on the same row.