Market Forces

Market forces refer to the fundamental economic factors of supply and demand that determine the price and quantity of goods and services in a market economy. When demand increases, prices tend to rise, and when supply increases, prices tend to fall, assuming other factors remain constant. Market forces drive competition, innovation, and resource allocation in an economy, ensuring that goods and services are produced and priced according to consumer preferences and market conditions.

Example

An increase in demand for electric vehicles causes the price of lithium, a key component in batteries, to rise due to limited supply, reflecting the impact of market forces.