The law of supply and demand describes how prices will vary based on the balance between the supply of a product and the demand for that product (Wikipedia, 2005). If there is a balance between supply (the availability of the product) and demand (how much of the product consumers want), then the price of the product would be considered good. If there is an imbalance, the price will change. According to Adam Smith, the invisible hand is a self-regulating force in the market that adjusts the price of a product through supply and demand (Colander, 2006). When a product is in short supply and there is significant demand for the product, the price will increase (Colander, 2006). When the quantity of the product is greater than the demand, the price will decrease (Colander, 2006). This assumes that a competitive market exists. This process of price variability based on the supply of a good and its demand will continue until an equilibrium is reached again (Wikipedia, 2005). At that point the balance between supply and demand is said to be established. Kirzner (2000) commented, “The theory of supply and demand is almost universally recognized as the first step toward understanding how market prices are determined.” Furthermore, this theory also explains how the price of a product influences production and consumption decisions (Kirzner, 2000). Scarcity means there is less of something than is required or desired (Investopedia Inc., 2005). For a nation, for example, scarcity can refer to natural resources, technology, labor, etc. Resources are always limited in one way or another, so individuals, companies and nations must make decisions regarding what resources are scarce. Choice may involve a trade-off, for example a worker needs more money, which can get by working longer hours. The trade-off would be less free time and less time for family. This is seen as the opportunity cost of making the choice. It is the advantage you give up with the best alternative to the activity you have chosen. In economic reasoning, that cost is less than the benefit of what you chose (Colander, 2006). The law of supply and demand and the concepts of scarcity and choice are interdependent on each other. If supply and demand are in balance, there is no shortage and the only decision a consumer makes is whether or not he wants the product and has the means to pay for it..