Supply and demand is the fundamental relationship between how much of something people want to buy and how much is available to sell, which helps determine its price.

Imagine your school cafeteria has only ten chocolate chip cookies left at lunch, but twenty students want one. That's high demand and low supply, so the cafeteria might charge more. But if they baked a hundred cookies and only ten students want them, that's high supply and low demand, so they might lower the price or even give extras away to avoid wasting them.

This concept explains why prices change in the real world. When a new video game console launches with limited units available, stores can charge full price because demand exceeds supply. A year later, when they've manufactured millions more, prices often drop because supply has caught up with demand.

The relationship works both ways. When concert tickets for a popular artist go on sale, high demand and limited supply mean tickets sell out quickly at high prices. But tickets to a less popular show might be deeply discounted because there's plenty of supply but not enough demand.

Economists call supply and demand the invisible forces that set prices in a free market. No single person or committee decides what things should cost. Instead, the natural push and pull between buyers and sellers finds the price where they meet.