Tilbudsetterspørselsteorien

Tilbudsetterspørselsteorien, often translated as the theory of supply and demand, is a fundamental concept in economics that explains how the interaction between the availability of a good or service and the desire for it determines its price. The theory posits that in a competitive market, the price of a good will adjust until the quantity supplied by producers equals the quantity demanded by consumers.

When demand for a product is high and supply is low, prices tend to rise. This is because consumers are willing to pay more to acquire the limited quantity available. Conversely, when supply is abundant and demand is low, prices tend to fall. Producers may lower their prices to encourage sales and clear inventory.

The equilibrium price is the point where the quantity supplied and the quantity demanded are equal. Shifts in either supply or demand curves will lead to a new equilibrium price. For instance, an increase in consumer income might increase demand, leading to a higher equilibrium price, assuming supply remains constant. Similarly, a technological improvement that lowers production costs could increase supply, potentially leading to a lower equilibrium price. This theory is a cornerstone for understanding market dynamics and price formation.