The Laws of Demand and Supply dictate the behavior of buyers and sellers in a market. Simply put, when demand is high and supply is low, prices go up; when demand is low and supply is high, prices go down. In other words, prices are dependent on how much people are willing to pay for an item and how much of it can be produced or supplied. This creates a balance between consumer demand and producer supply that is known as price equilibrium. Understanding the Laws of Demand and Supply, and how the balance of these two forces affects prices, gives businesses the power to make informed decisions about pricing, production, and marketing strategies.