Demand refers to the quantity of a product or service that consumers are willing and able to purchase at different prices during a certain period.

Key factors influencing demand include the price of the product, consumer income, prices of related goods (substitutes and complements), consumer preferences, and expectations of future prices.

The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.

Supply refers to the quantity of a product that producers are willing to offer for sale at different price levels.

Key factors influencing supply include the cost of production, technology, the number of sellers, the price of related goods, and government policies and taxes.

The law of supply states that as the price of a good rises, the quantity supplied also increases.

Market Equilibrium is the point at which the quantity demanded equals the quantity supplied. At this point, there is no tendency for the price to change.

Consumer choice theory studies how people decide to spend their money based on their preferences and budget constraints, aiming to maximize their satisfaction (utility).

Utility refers to the satisfaction derived from consuming goods. Total utility is the overall satisfaction, while marginal utility is the additional satisfaction from consuming one more unit. The law of diminishing marginal utility states that additional satisfaction decreases with each extra unit consumed.

Demand, supply, and consumer choice are deeply connected. For example, rising demand for electric vehicles (due to consumer preference and fuel costs) has led to increased supply from manufacturers, with consumers choosing EVs based on cost-benefit analysis and personal preferences.

When a new iPhone is launched, demand is high due to brand loyalty and innovation. Over time, as prices fall or newer models are anticipated, demand for the current model decreases, illustrating the law of demand.

During the COVID-19 pandemic, high demand for face masks led to increased prices, attracting more suppliers and increasing overall supply. As prices normalized, some smaller producers exited the market.

Uber uses surge pricing during high-demand periods. Higher prices reduce demand while incentivizing more drivers to supply rides, eventually balancing demand and supply at a new price level.