Which economic principle explains the relationship between supply and price?

The principle that best explains the relationship between supply and price is the concept of supply and demand. This economic theory asserts that the price of a good or service is determined by the availability of the product (supply) and the desire for that product (demand).

When supply increases and demand remains constant, prices tend to fall, and conversely, when demand increases while supply remains unchanged, prices generally rise. This interaction helps establish the price point at which consumers are willing to purchase a product and producers are willing to sell it.

In contrast, market equilibrium refers to the point where supply and demand balance each other out, which is an outcome of the supply and demand relationship rather than the principle itself. Price fixing involves artificially setting prices rather than allowing them to fluctuate based on market forces, while economic value refers to the worth of a good or service based on its utility and worth to consumers, but does not directly explain the relationship between supply and price.