Every market — corn futures, Treasury bonds, office space — is governed by the same law: the price adjusts until quantity demanded equals quantity supplied. This equilibrium point is where markets clear, and understanding it is the foundation of both microeconomics and asset pricing.

Demand slopes downward: as price rises, buyers want less. Supply slopes upward: as price rises, sellers produce more. Equilibrium is where the two curves intersect — the price at which the market clears. Any price above equilibrium creates a surplus (unsold goods, price falls). Any price below creates a shortage (buyers outbid each other, price rises). The market self-corrects.