Economic laws are fundamental principles that describe how economies function and how people make economic decisions. These laws help us understand patterns in markets, such as the relationship between supply and demand, which determines prices and quantities in the marketplace.
The law of supply and demand is the most fundamental economic principle. When prices rise, suppliers are willing to produce more goods, creating an upward-sloping supply curve. Conversely, consumers demand less at higher prices, creating a downward-sloping demand curve. The intersection of these curves determines the market equilibrium price and quantity.