Question
Class 7Social ScienceUnderstanding Markets

How does the demand and supply model work in a market?

Verified Answer

The demand and supply model explains how prices and quantities are decided.

Demand shows how much consumers want at different prices; supply shows how much producers will sell at those prices. Where the demand and supply curves meet is the equilibrium, giving the market price and quantity. If demand rises or supply falls, prices tend to rise; if supply rises or demand falls, prices tend to fall.