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The demand and supply curves show how sellers and buyers respond to prices; the interaction of sellers and buyers determines the price.
Every market has two agents; buyers and sellers. Demand for a particular product represents buyers in a market. Demand Curve actually shows the relationship between price and quantity demanded whereas Supply curve shows the relation between the cost of a good or service and the quantity supplied for a given period.
Demand is basically a description of all quantities of a good or service that a buyer will be willing to purchase at all prices. According to the law of demand, the relationship of demand and price is always negative: the response to an increase in price results in decrease in the quantity demanded.
Price depends on the interaction between demand and supply components of a market. Demand and supply basically represent the willingness of consumers and producers to engage in buying and selling. An exchange of any product takes place when buyers and sellers can agree upon a specific price.
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