The law of supply and demand explains the interaction between the supply of and demand for a resource, and the effect on its price.
 | | Term of the Day | Words to Know | | |  | | Law of Supply and Demand | | The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers for that resource. The theory defines what effect the relationship between the availability of a particular product and the desire (or demand) for that product has on its price. Generally, low supply and high demand increase price and vice versa. Perfect examples of supply and demand in action include PayPal. | | Read More » | | Related to "Law of Supply and Demand" | | | | SPONSORED BY INVESCO | | The Complete Guide to ETFs | | ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. | | Learn More » | | | Equilibrium | | Equilibrium is a state in which market supply and demand balance each other, and as a result, prices become stable. | | Read More » | | | Production Costs | | Production costs refer to the costs incurred by a business from manufacturing a product or providing a service. Production costs can include a variety of expenses, such as labor, raw materials, consumable manufacturing supplies, and general overhead. | | Read More » | | | Elasticity | | Elasticity is a measure of a variable's sensitivity to a change in another variable. | | Read More » | | | Market Price | | The market price is the cost for an asset or service. The price will fluctuate based on supply and demand and future expectations of the asset or service. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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