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Supply and demand

Supply and demand, in economics, central concepts that explain changes in prices, production, and consumption of goods and services. Demand refers to the quantity of a product desired by consumers. Supply is the quantity available. Normally, if demand increases relative to supply, the price will rise. If supply rises relative to demand, the price will fall. Competition is the mechanism through which supply and demand tend to reach an equilibrium. In practice, however, such factors as monopolization, state interference, and other variables generally prevent this equilibrium from ever being reached.

See also: Economics.

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