Why there is a PRICE RISE or PRICE FALL?

Lets understand basic Demand – Supply situations

- If there are more buyers of the stock Zang than sellers, then the price will go UP (i.e. Demand > Supply )

- If there are more sellers of Zang equity than buyers, the price will go DOWN (i.e. Supply > Demand )

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To understand it intuitively

As a seller of oranges, I have a daily customer base of 10 people, all buying 11 oranges daily at Re 1 per orange. On any given day, there will be an additional sales of 50 oranges with a chance of 10%, 30 oranges with 20%, 10 oranges with chance of 40%, and zero additional oranges sold with 30% chance.
The optimum number of oranges that I must carry every day, so as to maximize my profit (110*1 + 2*(50*0.1+30*0.2 + 10*0.4)) assuming that to the floating population I sell one orange @ Rs 2/- is 125.

So I expect to make Rs. 140/- per day .

SITUATION 1:
Today I could get only 110 oranges from the wholesaler, now at what price will I sell each orange – I can still sell to my sure customers @ Re 1 due to the daily relationship, but then I lose out on Rs 30/-, NOW WHAT??

Well I should increase the price of one orange, so that I will still make Rs 140/- , but should sell to my regular customers only, or sell a lesser quantity to my regular customers, and overcharge the floating population

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Either ways what has happened is that - there are more buyers than sellers, so I’m able to sell one orange at a higher price.

SITUATION 2:
Now, talking the other way – another orange seller comes and sets shop adjacent to me, but with just 50 oranges (and I still have 110).
If I still insist on selling my oranges at Rs. 1, I will not be able to sell them all, so what price should both of us charge?

The total amount the buyer are ready to spend is Rs 140. The price should be such that
(110 + 50)* Price = Rs 140; i.e Rs 0.875 per orange.

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There are more sellers than buyers, so I’m have to sell one orange at a lower price.