supply-demand analysis business definition

An evaluation of a good or service on the basis of factors affecting its supply and demand. Supply-demand analysis is supposed to determine if an imbalance exists or will exist between supply and demand for a good or service. For example, if the supply of a good is expected to exceed demand, its price can be expected to decline. Supply-demand analysis incorporates information on manufacturing capacity, currency exchange rates, consumer incomes, interest rates, and many other factors that influence availability and purchases.