What is supply and demand theory? How does it effect the price?

The law of supply states that supply increases as prices increase and then decreases as prices decrease.
The law of demand, on the other hand, states that as prices decrease, demand will increase and as prices increase, demand will decrease.
Regards, Ahmed

thanks to ahmad with a great definition about the supply and demand and their relatioship with price.
i just wanted to add some points.
there some stuff they do not follow the supply and demand rule.
like water another point is the relationships of supply and demand are true in short period of time and in long terms the price stays fixed.

Ahmad supply and demand, Akbar added a good point...
Actually, supply and demand theories are more sophisticated especially in determining price and on the other hand price itself is highly sensitive and follows macroeconomics and microeconomics theories.
So you can explain price changes due to supply and demand in some cases but it's very difficult to predict price changes by relying on supply and demand alone.

Dear Abdul Rahim, I think Ahmed and Akbar have succinctly answered your question.
Regards Tahir

Logically, supply has to be more when the demand increases to make fortune.
When the demand dips, the supply has to go down to control the inventory cost.
Black marketers choke the supply when demand increases and increase the price to make fortunes.
In competitive open market prices can be dropped to increase the demand and guard the bottom line margins because of volumes.
Water for human consumption is also falling in line as the supply is getting limited in many countries.
Increase in price for increased demand will be applicable to limited supplies of natures products and by products.

the theory has4 laws with2 variables ( demand & supply )1-Demand increases leads to shortage.
effect: higher price.2-Demand decreases leads to surplus.
effect: lower price.3-Demand unchanged and supply increases, leads to surplus.
effect: lower price.4-Demand remains unchanged and supply decreases, leads to shortage.
effect: higher price.

العرض والطلب الاول قد يؤثر على السعر اما الاخر فهو ليس معروض وانما مطلوب فمتا يأتي الطلب عندما يحصل على المنتج على يناء لاسمه من التسويق والترويج له وعندها سيطلب بأسمه

When we have demand and supply is low , the price going up , and when we have a big range off supplier and our demand is low the price is come down , in normal market