Supply and Demand

Imagine a fishing village with one dock. Every morning five boats come in carrying fresh fish. The village has fifty families who want fish for dinner. There is plenty to go around and the price stays low. Now imagine a storm destroys three of the five boats. Tomorrow morning only two boats arrive with half the usual catch. Fifty families still want fish. There is not enough for everyone. The price rises until some families decide it is not worth it and walk away. Nobody set the price. The market set itself. That is supply and demand. When there is plenty of something and few people want it, the price drops. When there is not enough and everyone wants it, the price climbs. It sounds simple but it drives every price you have ever paid for anything. Your rent, your groceries, your salary.