The law of demand states that when the price rises, demand reduces, as all other factors stay constant. At the same time, the law of supply states that when prices rise, so does supply. The upward sloping supply curve is caused by the direct link between price and supply. At the same time, because of the inverse relationship between price and demand, the demand curve slopes downward.

The law of supply and demand provides insight into how buyers and sellers interact to determine price and quantity in a competitive market. For example, consumers frequently choose items and services that are both inexpensive and provide the necessary utility. The seller, on the other hand, wants to get the best price for their goods and services.

The four essential notions that explain demand and supply are a way of describing what demand and supply are:

• Demand rises while supply remains constant: In a competitive market, this will result in a price increase. The product's worth rises as a result of the scarcity.
• Demand falls while supply remains constant: The price drops in this circumstance. If demand continues to fall, a surplus of the commodity will be available on the market, lowering the product's value.
• When supply increases but demand remains constant, the price of a product falls, resulting in an oversupply situation if demand remains constant for a long time.
• Supply decreases and demand remains unchanged: .When supply falls but demand stays the same, the price rises.