When many people think of 'economics,' the first idea that comes to mind is 'supply and demand.' Consumers of business news are quite used to commentators and analysts, when asked why gas prices have risen, or why wages are low, or why salmon costs more than tuna, explaining that 'It's supply and demand.'
What exactly does that mean? Most people probably have an intuitive sense; 'supply' refers in some way to the amount of something that is for sale, and 'demand' refers in some way to how much people want. This is basically right. But think about it: both of those intuitive definitions are referring only to quantities. So where do prices come in? To answer that question, we've got to think clearly about demanders and suppliers.
