oboloo Glossary

Supply-Demand Curves

oboloo Glossary

Supply-Demand Curves

A supply-demand curve is a graphical representation of how the price and quantity of a good or service interact in the market. It shows producers’ willingness to supply and consumers’ willingness to buy at different prices. The demand curve (the line on the left) shows an inverse relationship between the price of a product and the quantity demanded—as the price increases, the quantity demanded decreases. The supply curve (the line on the right) shows a direct relationship between the price of a product and the quantity supplied—as the price increases, the quantity supplied increases. When the price for a good or service is just right, it sets off a chain of actions: demand meets supply and the market is in equilibrium.