What is the principle of supply and demand?

Demand:

Demand comes from the behavior of buyers.

The quantity demanded of any good is the amount of the good that buyers are willing and able to purchase.

Law of demand: the claim that the quantity demanded of a good falls when the price of the good rises, other things equal

Supply:

Supply comes from the behavior of sellers.

The quantity supplied of any good is the amount that sellers are willing and able to sell.

Law of supply: the claim that the quantity supplied of a good rises when the price of the good rises, other things equal

there's is a surplus when quantity supplied is greater than quantity demanded and a shortage when quantity demanded is greater than quantity supplied.

In market economies, prices adjust to balance supply and demand. These equilibrium prices are the signals that guide economic decisions and thereby allocate scarce resources. If the market price is above equilibrium, a surplus results, which causes the price to fall. If the market price is below equilibrium, a shortage results, causing the price to rise.