Demand for a commodity refers to the quantity that consumers are willing to purchase at a specific price within a given period. The law of demand states that, all else being equal, as the price of a commodity decreases, the quantity demanded increases, and vice versa. This relationship is typically illustrated using a demand schedule, which is a table detailing the quantities of a commodity demanded at different prices. A demand curve, derived from the demand schedule, graphically represents this relationship. Individual demand reflects the quantity one consumer buys at a given price, while market demand represents the total quantity all consumers are willing to purchase at that price over a specific period.

Supply, on the other hand, refers to the quantity of a commodity producers are willing to produce and offer for sale at a particular price during a specific period. The law of supply posits that, holding other factors constant, producers will supply more of a commodity as its price increases and less as its price decreases. A supply schedule provides a tabular overview of the quantities producers are willing to supply at various prices, while individual supply pertains to the amount a single firm is willing to produce at a given price. Market supply aggregates the total quantity all producers are prepared to supply at a specific price within a defined timeframe.

Market equilibrium occurs when the quantity demanded of a commodity equals the quantity supplied. At this equilibrium, the market settles on an equilibrium price, which is the price at which the quantity demanded equals the quantity supplied. The equilibrium quantity is the amount of the commodity bought and sold at this price. Graphically, the equilibrium price is determined at the intersection of the demand curve and the supply curve, showcasing the balance between consumer demand and producer supply in the market.