Supply and Demand

Economic principle describing the basically three-part relationship between the supply, demand and price of certain goods. A high-supply and low-demand market will create lower prices (deflation). A low-supply and high-demand market will create higher prices (inflation). A subsidiary concept of the law of supply and demand is that the market tends to adjust itself toward equilibrium. For more information, see the "Real Estate Investment Analysis Tools" article in the "Real Estate Investing" section.

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