Microeconomic Supply and Demand is the relationship between how much of a product or service suppliers are willing to provide and the amount consumers are willing and able to purchase. It’s an important economic concept because it helps explain the determination of price and quantity in a market. At its most basic level, supply and demand reflects the fact that producers have a natural incentive to produce more when the price rises, while customers tend to buy less when prices increase. By understanding these forces, businesses can gain insights into how their products and services will be priced in the marketplace and the likely level of sales they will experience.