One thing I learnt from my economics class while in high school was Supply and Demand and I am sure a lot of people have heard this words before. The willingness of people to buy a product with the ability to buy them is known as Demand while the number of goods available to sell to people is known as supply (this should be an easy answer to what demand and supply is). If demand for a particular goods or services increases above the supply available, the price increases and if the supply surpasses the demand for the goods or services available, then the price reduces or drops.
So many definitions in economics use too have a saying “All things being equal”. I like this saying because in our world nothing is equal and so we can say for sure that while demand and supply affects a lot of goods and services, it doesn’t affect so many things in our economy. There is no perfect market in the real world and so we should expect a practical market.
In a negotiation scenario, if the cost of producing a product is $5 dollar, and the seller aims to make a 25% profit on it giving the selling price of $6.25 but then since everyone is not opened to information and not everyone has access to the producer, the seller can decide to give it a selling piece of $10 and then when buyers and sellers start to negotiate, other factors start to affect the price like customer and seller relationship and so on then affect the final price of the goods.
Also, in some industry, demand and supply doesn’t affect the price of goods because there are a lot of factors that will resist the price from changing. If a company already have a price to sell products, and there is a little change in prices of goods which could affect the business growth and incur more money, like in the place of marketing, procuring new price list, and so on, the company will better stick to its old prices (sticky prices). The only market that usually follow the supply and demand trend at almost all time is the stock market since it doesn’t need anything to change prices.