Why Prices Go Up and Down
Price is a tug-of-war between how much exists and how many people want it.
The idea
Price is where two forces meet: supply, how much of something exists to sell, and demand, how many people want it. When supply shrinks or demand grows, the price tends to rise. When supply grows or demand shrinks, the price tends to fall. This is why the same thing can cost different amounts on different days, and it is the reason stock prices move too. 📈
Words to know
- supply
- How much of something there is to buy right now.
- demand
- How many people want to buy something and are ready to pay for it.
- shortage
- When people want more of something than there is to go around.
- surplus
- When there is more of something than people want to buy.
- supply shock
- A sudden event, like a storm or a strike, that cuts how much of something can be made.
Try it — no account needed
Supply is how much of something exists to buy. Demand is how badly people want it. Swipe true or false.
If lots of buyers want a limited-edition sneaker, the resale price usually goes up.
In the full lesson
- 1True or false
- 2Work out the number
- 3Make the call
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
Practice with real prices
Real market data, pretend money. Learn how investing actually works without risking a cent.
Start free