Supply and demand is the system by which the market sets prices for goods and services. Supply refers to the available quantity of goods and affects prices by having rare items (like gold bars) cost more than common items (like jugs of milk). By contrast, demand refers to the consumer interest in any given product, with prices rising as customer interest rises (if a large number of people developed a milk allergy, the cost of milk would drop sharply because so few people would want to purchase it).