What does supply and demand describe?

Supply and demand refer to the fundamental economic principles that describe how the availability of a product (supply) interacts with the desire for that product (demand) in the marketplace. When supply increases and demand remains constant, prices tend to fall; conversely, when demand increases and supply is constant, prices tend to rise. This relationship helps to determine the market equilibrium price and quantity of goods exchanged. Understanding this dynamic is crucial for businesses in making pricing decisions, planning inventory, and forecasting sales.

The other options relate to important concepts in marketing and economics but do not define supply and demand. The level of competition within a market focuses on how businesses compete against each other rather than on the relationship between product availability and consumer desire. The stages a product goes through during its market presence pertain more to the product life cycle, and branding strategies deal with how companies create unique identities for their products, rather than the underlying economic principles of supply and demand.