Which term describes the economic principle of supply and demand?

The economic principle of supply and demand is best described as market dynamics. This term encapsulates the broader concept of how supply (the amount of a good or service available) and demand (the desire and ability of consumers to purchase that good or service) interact to determine prices and the distribution of resources in a market.

Market dynamics encompasses the forces, trends, and various factors that can affect supply and demand, leading to fluctuations in the market. These dynamics can include changes in consumer preferences, production costs, technological advancements, and external economic factors.

While market equilibrium refers specifically to the state where the quantity supplied equals the quantity demanded, it is a result of the dynamics between supply and demand rather than a broader description of how these forces work together. Market capacity deals with the maximum supply potential, and market analysis is a review process used to evaluate conditions and trends in the marketplace rather than a fundamental economic principle. Thus, market dynamics captures the essence of how supply and demand function in the economy.