Price is the signal that balances what is made with what is wanted. Follow the two curves to the equilibrium, and watch a shortage or a surplus push the price back.
Supply and demand is a simple model of how a market sets a price. Buyers want to pay as little as possible; sellers want to charge as much as possible. Drawn as two curves on one diagram, the two sides meet at a single point — the equilibrium — which gives the price the market tends toward and the quantity that changes hands.
It is one of the most familiar ideas in economics, but it is usually shown only as a static picture. Here the curves, the crossing point and the pull of shortage and surplus are drawn as a moving model you can read at a glance.
Because the whole idea lives in the relationship between the two curves. The vertical axis measures price and the horizontal axis measures quantity, so any shift can be seen as a movement on the same picture. Once you see where the curves cross, the effect of a shortage, a surplus or a change in demand becomes easy to follow.
The demand curve slopes down: at a lower price, buyers are willing to take more. The supply curve slopes up: at a higher price, sellers are willing to bring more. Together they describe what each side of the market would do across every possible price.
Where the two curves cross, the quantity buyers want equals the quantity sellers offer. The price on the vertical axis at that point is the equilibrium price, and the quantity below it is the equilibrium quantity — the amount that actually trades.
If the price sits below the equilibrium, buyers want more than sellers offer. Whoever needs the goods starts to bid higher, and the price is pulled back up toward the crossing point.
If the price sits above the equilibrium, sellers offer more than buyers want. Unsold goods pile up, sellers cut their prices, and the price is pushed back down.
When something other than price changes what people want, the whole demand curve moves. If demand rises it shifts to the right, and the market settles at a new crossing point: a higher price and a larger quantity.
The equilibrium price is the price at which the quantity buyers want equals the quantity sellers offer. It is the single price at the point where the demand curve and the supply curve cross, so nothing is left over and nothing is missing.
Because at a lower price more people are willing and able to buy. As price falls, the quantity demanded rises, so the curve runs from top-left down to bottom-right.
Sellers bring more to the market than buyers want, so a surplus builds up. To clear it, prices are pushed down until the market returns to the equilibrium.
A move along a curve is a reaction to a change in price. A shift is when the whole curve moves because something other than price changed, such as tastes, income or the cost of inputs.
No. It is a heavily simplified teaching model. Real markets have many more products, delays, rules and imperfections. The curves here exist to show the basic idea of how price balances supply and demand.