Supply and demand can affect price because low demand and high supply would create lower prices (cf. the current real estate market), and the reverse can also occur: high demand and low supply can drive prices up (cf. Jolly Rancher candies are very cheap per item when sold in high supply in the grocery store but are comparatively costly when sold at recess in a low-supply environment by an enterprising young man I know!).
Fluctuating demand creates unstable prices, for example seasonal items such as school supplies which will be more expensive the week before school starts and cheaper the week after.
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