Supply and demand determine market equilibrium prices. When supply exceeds demand, prices tend to decrease, and vice versa. This interaction influences producers' output levels and consumers' purchasing decisions, impacting economic activity.

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Supply and demand dynamics influence market prices through the interplay of buyer and seller behaviors. When demand for a product or service increases while its supply remains constant, prices tend to rise due to scarcity. Conversely, if supply exceeds demand, prices may fall as sellers compete to attract buyers. This relationship between supply and demand is fundamental to price determination in markets.

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