Supply and Demand

The basic supply and demand model of a competitive market is used to determine the equilibrium values of price and quantity. The upward sloping supply curve represents those combinations of price and quantity that sellers, in aggregate, are willing to offer; while the downward sloping demand curve represents those combinations that buyers, in aggregate, are willing to accept. The intersection of the two curves is the unique point at which there is neither a surplus (an excess of supply over demand), nor a shortage (an excess of demand over supply).