The Need-and-Demand response model is an economic theory that tries to explain the behavior of the price of goods in markets. The theory explains that if a good is scarce, this will result in the rise of its price, as the current demand for it, which has kept stable, is willing to pay more for it. The price point or "equilibrium", is the price at which buyers and sellers are ok with while dealing with this good.
For example, there has been a bad harvest season, resulting in a decrease in tomato supply. I like tomatoes and am willing to pay a bit more for them. However, my budget is limited and there is just a bit more than I can pay for it without compromising my economy. Therefore, when the price rises above the point I am willing to pay I will cease buying tomatoes. At some point, tomato sellers will notice that their price rise is causing the tomatoes to no being sold. Therefore, they will lower the price.
In Politics, governments sometimes intervene with the prices of certain goods they consider as critical for the subsistence of their citizens. Such as rice. If there is a considerable price drop and it is no longer profitable for producers to grow rice, the government will intervene by offering subsidies in order for the rice to still be suitable for production.
