Supply Decreases Demand Increases is an economic concept that describes how changes in supply and demand affect pricing in the market. In a nutshell, when supply decreases, demand increases — leading to an increase in prices. This economic phenomenon occurs when there is a scarcity of goods on the market; with fewer products available and more people wanting them, vendors can charge more for their goods. It’s an important principle to understand when looking at the global economy, and it helps explain why certain commodities may cost more than others.