🎓 Business Basics - The Market Makes The Price

Market Prices are defined by Supply & Demand

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It´s actually always the market that defines the price for some Product or a Service but during our daily life´s this fact gets mostly lost as it´s not really visible for us anymore due to it´s huge complexity. Therefore I want to show you the general logic of how supply and demand determine the Market Price with a very simple example.

While real world markets mostly consist of many suppliers and thousands of buyers we will imagine a market just having one supplier and a single buyer with Steem Tokens as a product. So the Price they both agree on to trade with each other will basically be the market price. But let´s take a detailed look…

How the Market Price gets determined

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Within the illustration above you may see a line indicating the Supply and another one showing the Demand on Steem. While the Supplier would love to sell more and more Steem at higher prices the Buyers willingness to buy them will decrease respectively.

Due to that reason there will always only be a certain quantity of Steem the supplier can sell due to the buyers willingness to make a trade at that exact offered price only. This being said as well might explain the order books in all CryptoCurrency exchanges to you as it´s nothing else than Supply and Demand in action. As soon as an order gets filled it means that two parties agreed to trade a certain quantity with each other for a certain price.

To sum it up, all prices on the market are made by Supply and Demand. Might it be the Bread in the Bakery, the Car in the Dealership or Steem on an exchange. You´ll always have some who are willing to sell and some who are willing to buy and wherever they meet each other determines the current market price.

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