One of the principle sources of fluctuation and growth in any economy is identified by the supply and demand in the market.

Markets depend on buyers and sellers to become a competitive market where they are mostly controlled by money. Buyers don’t have enough and sellers want as much as they can get.

While supply is the amount of goods a seller is willing and able to sell, it is affected by several facts; prices, input prices, technology and expectations.

Demand is the amount of goods a buyer is willing and able to buy but also depends on changes like income, prices of related goods, tastes of consumers and ultimately, expectations too.

While these definitions help understand the basics of the economy, we also need to understand how the supply and demand are kept in control or what is better called an “equilibrium”.

The market equilibrium occurs at a price where the quantity demanded by consumers meets t

A better explanation of this is to look at the circular flow of every dollar made by us, and how we use it. There is no beginning or end.

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