Law Of Supply And Demand

Dictionary Says

Definition of 'Law Of Supply And Demand'

A theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply and demand defines the effect that the availability of a particular product and the desire (or demand) for that product has on price. Generally, if there is a low supply and a high demand, the price will be high. In contrast, the greater the supply and the lower the demand, the lower the price will be.

Investopedia Says

Investopedia explains 'Law Of Supply And Demand'

The law of supply and demand is not an actual law but it is well confirmed and understood realization that if you have a lot of one item, the price for that item should go down. At the same time you need to understand the interaction; even if you have a high supply, if the demand is also high, the price could also be high. In the world of stock investing, the law of supply and demand can contribute to explaining a stocks price at any given time. It is the base to any economic understanding.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Free Market

    A market economy ...
  2. Theory Of Price

    An economic ...
  3. Inelastic

    An economic term ...
  4. Elastic

    A situation in ...
  5. Moore's Law

    An observation ...
  6. Demand Theory

    A theory ...
  7. Price Elasticity Of Demand

    A measure of the ...
  8. Economic Equilibrium

    A condition or ...
  9. General Equilibrium Theory

    General ...
  10. Underconsumption

    The purchase of ...

Articles Of Interest

  1. Why We Splurge When Times Are Good

    The concept of elasticity of demand is part of every purchase you make. Find out how it works.
  2. Pent Up Demand

  3. Demand Theory

  4. Income Elasticity Of Demand

  5. Price Elasticity Of Demand

  6. The History Of Economic Thought

    Economics is a vital part of every day life. Discover the major players who shaped its development.
  7. 3 Ways To Tell If Your Stock Has Bottomed

    No one can call stock bottoms with absolute certainty, but there are some common trends that appear when stocks are about to hit bottom.
  8. Is Growth Always A Good Thing?

    Getting big quickly looks good, but companies can get into trouble when they do it too fast. Find out how to spot this trouble.
  9. The Impact Unpaid Internships Have On The Labor Market

    The dramatic increase in unpaid internships has given rise to favorable and unfavorable arguments based on their impact on the students/interns, the labor force and the economy as a whole.
  10. A Primer On Inflation

    Inflation has a negative connotation, but is it all bad or does it offer some tangible benefits?

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center