We have defined "demand" as a relation between the price of the good and the quantity consumers want to buy. Similarly, we have defined "supply" as the relation between the price and the quantity that producers want to sell. When we put these two concepts together, we identify the market "equilibrium" with the price and quantity at the intersection of the demand and supply relations -- that is, a price just high enough that quantity demanded is equal to quantity supplied, and the quantity corresponding to that price.
In a wide variety of historic and current examples, we find that we can explain changes in quantities and prices as the equilibria of supply and demand, with shifts in demand or in supply causing changes in price and quantity. The changes in price and quantity are coordinated in ways that can be understood and predicted, if we understand the theory of supply and demand.
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