The cost to produce is not part of the curve. We also know that these classical models of supply and demand and cost do not apply as well as they used to because of outside factors. When cost is lower, the demand for the item goes up, and when cost is higher, the demand goes down. Think of the cost of a haircut. If the price is lower, you want to get one more often. If McDonald's puts a price on sale, more people go to McDonald's. When demand is higher, there should be more production and more competing suppliers. Higher demand allows a higher price. Lower supply allows a higher price. You consider if something changes what happens to the other in price, supply, demand. More demand for Engineers and Engineering salaries go up, and more students enter Engineering schools. Too many Engineer graduates (supply) and companies can offer lower salaries (price).