Explain · Like I'm five version
Supply and demand in terms of Glastonbury tickets
Supply and demand is just like trying to buy a ticket for Glastonbury.
Imagine there is a box of yummy biscuits that everyone wants to eat. If there is only one biscuit left, but ten hungry children all shouting for it, the person with the biscuit can ask for a lot of pocket money. This is when the price goes up because the supply is very low and the demand is very high.
Sometimes the shop might have piles and piles of bouncy balls that nobody wants. If the shop is full of them, they might put a sign up saying they are only one penny each. When there is too much of something, the price drops down so that someone will finally take them away.
It is all about finding a balance between what is ready to be sold and how many people are waiting with their coins. If the supply matches the demand, everyone is happy and goes home with a treat. If you have too little of a popular item, you just end up with a very long queue of grumpy people.
Where the analogy breaks downGlastonbury tickets cannot be made in a factory to match demand.