The Law of Supply and Demand is an economic concept used to explain how different forces in the marketplace interact. In a free market economy, the demand for a product or service will determine the supply available, and vice versa. When the demand for a product or service increases, so does the price. Likewise, when the supply of something increases, so does the competition, resulting in lower prices. This concept is at the core of understanding how markets work and why people make certain decisions about buying and selling goods and services.