According to the law of supply and demand, what happens when demand is high and supply is low?

When demand is high and supply is low, the natural outcome is for prices to increase. This relationship is a fundamental principle in economics known as the law of supply and demand. When more consumers want a product (high demand) than there are units available (low supply), buyers compete for the limited goods. This competition typically drives prices upward because sellers can charge more due to the high interest in their product.

In such scenarios, if the supply can't meet the demand, consumers may be willing to pay a premium to secure the item, thus leading to an overall increase in market prices. This dynamic reflects the balance that is sought in a market economy, where prices adjust to align supply with demand in an attempt to reach equilibrium.