Supply and demand coordinate to determine prices by working together. competitively. with other factors. separately.

The relationship between supply and demand is fundamental in determining prices in a market. Let's break down how they interact: 1. **Working Together**: Supply and demand work together to establish equilibrium prices. When demand increases, prices tend to rise, prompting suppliers to produce more. Conversely, if demand decreases, prices fall, leading suppliers to reduce production. 2. **Competitively**: In a competitive market, supply and demand interact to set prices. If there are many suppliers and consumers, prices will adjust based on competition. For example, if a product is in high demand but low supply, prices will rise until equilibrium is reached. 3. **With Other Factors**: Prices can also be influenced by external factors such as government regulations, taxes, and changes in consumer preferences. These factors can shift the supply and demand curves, leading to new equilibrium prices. 4. **Separately**: While supply and demand can be analyzed separately, their effects on price are interconnected. An increase in supply with constant demand can lower prices, while an increase in demand with constant supply can raise prices. In summary, supply and demand coordinate to determine prices primarily by working together, but they are also influenced by competitive dynamics and other external factors.