Supply and demand are fundamental concepts in economics that describe how the quantity of a good or service available (supply) interacts with the desire of consumers to purchase it (demand). When demand exceeds supply, prices tend to rise, while an oversupply can lead to lower prices. This relationship helps determine the market equilibrium, where the quantity supplied equals the quantity demanded. Understanding supply and demand is crucial for businesses and policymakers. It influences pricing strategies, production levels, and economic policies. For instance, during a shortage, businesses may increase prices to balance the market, while in times of surplus, they may lower prices to stimulate sales.