Demand and supply in economics refer to a system of market relations in any economy between prospective buyers and sellers of certain goods and or services. The supply and demand model is used to determine not only the price of a certain good that will be sold in the market.
The supply and demand model is of fundamental importance in economics since it is used to conduct an analysis of behaviors of both sellers and buyers. The analysis of the demand schedule and the supply schedule helps to determine the prices of different goods given the output available and the buyers’ budget lines.
The demand schedule analysis the amount of goods or services that will be demanded by various customers at certain prices. This leads to the computation of the demand curve. On the other side the supply schedule gives an analysis of the level of output that suppliers are willing to supply into the market given the price in the market. The interaction between the supply curve and the demand curve ultimately gives the equilibrium levels of price and quantity that will be in existence in the, market ceteris paribus.