Supply and demand are fundamental principles that shape market economies. Supply refers to the quantity of a good or service that producers are willing to sell at various price levels, while demand refers to the quantity consumers are willing to buy at those prices. When demand exceeds supply, prices tend to rise, encouraging producers to supply more, leading to a new equilibrium price. Conversely, if supply outstrips demand, prices may fall, prompting consumers to buy more. External factors, such as changes in consumer preferences, government regulations, or technological advances, can shift the supply and demand curves, leading to changes in the equilibrium price and quantity. Additionally, price elasticity plays a key role in how responsive demand and supply are to price changes. In cases of market disequilibrium, such as a shortage or surplus, the market adjusts over time to return to equilibrium, as producers and consumers respond to the changing condition.