The supply and price relationship is an economic concept that explains how the prices of goods and services are determined by the balance between their availability in the market and the demand for them. It highlights that when demand increases and supply remains fixed, prices tend to go up; conversely, when supply increases and demand remains fixed, prices tend to fall. In a competitive market, both buyers and sellers play a role in this process. As the number of buyers rises, so does the demand for the product, leading to higher prices. When the number of sellers increases, there is more competition and thus prices tend to go down. Understanding this principle ensures businesses have efficient strategies for managing their operations and setting competitive prices – enabling them to stay competitive and remain profitable.