The demand and supply of a product are linked with each other. Both the components rise and fall with same proportion. Why do these factors fluctuate? This is because the need and popularity of a product changes. Consider the example of cereals. If chocolate flavored cereals are launched for the first time, both demand and supply would be high. As it is a new product, everyone would be interested in tasting it. In addition to that, the company would be in a position to keep a very high price. When more people would be buying chocolate flavored cereals, the demand would be high. Hence, the company would have to supply at a high rate as well.
Demand and supply can be defined as two sides of a sea saw. The increase or decrease of one factor affects the other. If the demand is dropping or rising at an abnormal rate, the government of a county takes adequate steps to maintain a balance. In most cases, a policy is defined. If the prices of powdered milk rise due to application of taxes, people would switch to liquid milk. In this case, the government may launch a rule that taxes would be applicable only on people above a certain salary limit.
The demand and supply rates do not change rapidly for every product. If the rate of consumption is high, the prices and usage rates change frequently. Thus, economic policies change more often as well.