What is an example of supply and demand in a practical scenario?

Changing pricing strategies based on peak demand times is a clear example of supply and demand in action. In economics, demand refers to the quantity of a product that consumers are willing to purchase at various price levels, while supply refers to how much of a product is available for sale at certain prices. By adjusting pricing strategies during peak demand times, businesses align their prices with consumer willingness to pay, which can lead to maximized revenues.

For instance, if a hotel raises its rates during a holiday season when more people are traveling, it exploits the increase in demand for accommodations. This strategy reflects an understanding of market dynamics—when demand is high, companies can increase prices, and when demand decreases, they may reduce prices to attract more customers. This responsiveness to changing market conditions epitomizes the principles of supply and demand at work.

Regarding the other options, they may involve market strategies or adaptations to consumer interests but do not directly illustrate the interplay between supply and demand dynamics as powerfully as adjusting pricing strategies during peak demand.