The term 'supply and demand' is an ECONOMIC concept that refers to the relationship between the amount of a product or service that is available and the amount of it that people are willing to buy. It is a fundamental principle of economics that affects the price of goods and services, as well as the quantity of them that are produced and consumed. When supply is greater than demand, prices tend to fall, while when demand is greater than supply, prices tend to rise. This concept is used to explain how markets work and how prices are determined.