supply and demand

1. In classical economic theory , the relation between these two factors determines the price of a commodity . This relationship is thought to be the driving force in a free market . As demand for an item increases, prices rise. When manufacturers respond to the price increase by producing a larger supply of that item, this increases competition and drives the price down. Modern economic theory proposes that many other factors affect price, including government regulations, monopolies , and modern techniques of marketing and advertising.

Example Sentences

Supply-and-demand is not the one Law of Nature; Cash-payment is not the sole nexus of man with man,—how far from it!

From Project Gutenberg

As it is, we can still supply enough food, and the old supply-and-demand takes care of the economy as a whole.

From Project Gutenberg

Laissez-faire, Supply-and-demand,—one begins to be weary of all that.

From Project Gutenberg