What Is The Relationship Of Supply And Demand?

Classical economists believed that Supply creates its own demand. According to them, you could produce as much as you want and the market would clear.
However, modern economists believe that markets should be at delicate equilibrium between demand and supply in order for the market to clear and not to fail. As the Price of a good increases, its demand falls because of the budget constraint on the consumers. However, as the price increases, it provides more incentive to the producers to produce more (higher prices mean higher profits). However, as the demand is simultaneously increasing, the product would be in surplus and the market would not clear.
Alternatively, when Price decreases, it is an incentive for consumers to buy more (because they can afford to) and for producers to produce less (lower returns). Thus, people want to buy more than is available, leading to a scarcity in the market.
So, markets ideally produce where the Supply and the Demand of a product are equal. Above this point, there would be a surplus of goods and below this point there would be a shortage of the goods (demand would not be fulfilled).