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Supply and Demand

Economics

The microeconomic mechanism by which market price is determined through the interaction of buyers' willingness to pay (demand) and sellers' willingness to supply at each price level.

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Supply and demand is the base analytical frame of price formation: the quantity sellers will offer rises with price, the quantity buyers will take falls with it, and the price at which the two meet clears the market. Its use in trade work is to see who actually bears a measure. A tariff raises the landed cost of an import, but how much of that lands on the buyer and how much is absorbed by the seller depends on how responsive each side is to price. The same reasoning explains why a quota and a tariff that restrict the same volume do not distribute the cost the same way.
Why this entry carries no source list. This is an analytical concept from economics, not an instrument any body administers. There is no authority to cite because none is needed: the idea is used to reason about trade, not applied by a customs officer to a consignment. Where numbers are involved they come from statistical compilations whose conventions differ, so figures from two sources are not automatically comparable.

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From the AJG lexicon archive (July 2026).

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