The study of demand and supply is very important for the understanding of the various functions and operations of economics. Demand can be described as “the amount of a product that will be purchased for a given price at a particular period of time” (Johnson 13). Supply on the other hand is “the quantity of a product that the sellers and distributors are willing to sell at a particular price, during a particular period of time” (“Laws of Supply” 4). Demand and supply determine the price of a product.
Wiener states that “the equilibrium price of a product will be the one at which the demand and supply for that product are equal” (qtd. in Sparrow 34).
In other words The price at which the quantity demanded of a particular product is equal to the quantity supplied of that product is referred to as the equilibrium price for the product. It is basically that price at which the demand and supply for the specified product are in equilibrium.
(Holden 40) The amount of a product that is bought and sold at the equilibrium price is called the equilibrium quantity. This too is determined by the forces of demand and supply. “Demand and supply forces are what govern the price of commodities,… these forces are highly imperative to the functioning of an economy” (Brown 102).