Explain the significance of demand and supply.
The significance of supply and demand is that they essentially determine how many of a given good or service will be sold and at what price. This happens in a market economy like the one that we have in the United States.
Every good or service that is sold has a certain level of demand and a certain level of supply. The demand for the product is the amount of it that people can and will buy at any given price. The supply for the product is the amount of it that producers can and will sell at any given price. On a graph, each of these is represented by a line.
Supply and demand work together to determine how much of a product will be made and what price it will sell for. On a graph, that point is shown by the intersection of the demand curve and the supply curve.
Thus, the significance of supply and demand is that they interact to determine the price and quantity of each good or service that is sold in a market economy.