Difference Between Supply and Demand

Supply has a direct relationship with the price of a product or service, which means that if the price rises, its supply will also increase. Conversely, If the price falls, then the supply will also decrease. Demand has an indirect relationship with the price of a product or service. If the price drops, demand will rise and vice-versa.

Nowadays, people have become very selective concerning what they use, wear or carry. They are very conscious about what to purchase and what not to buy? A small change in the prices or, say, a certain commodity’s availability drastically affects people. A small disequilibrium in these two (demand and supply) will cause the whole of the economy to suffer.

Demand and supply are perhaps among the most crucial concepts of economics Economics Economics is an area of social science that studies the production, distribution, and consumption of limited resources within a society.read morestudied worldwide. It is also the backbone of a huge market economyMarket EconomyA market economy (ME) refers to a form of economic system where businesses and consumers drive the economy with minimal government intervention. In other words, the laws of demand and supply determine the price and quantity of goods produced in an economy.read more.

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  • Demand can be referred to as how much the buyer desires (quantity) a service or product. buyer desires (quantity) of a service or product. The quantity demanded Quantity DemandedQuantity demanded is the quantity of a particular commodity at a particular price. It changes with change in price and does not rely on market equilibrium.read more will be the amount of that product that people are willing to purchase at a certain price. The relationship between the quantity demanded and the price is called the demand relationship.Supply represents how much the market can offer a certain product or service. The quantity supplied can be referred to as the amount of certain good producers they provide that is received recklessly for a certain price.

Supply vs Demand Infographics

Key Differences

The key differences are as follows:

  • Demand is the equilibrium between the price and quantity demanded of a product or commodity at a certain period. On the contrary, the equilibrium between the price of the product or goods and the quantity supplied at a given period is called supply.While the demand curve, as mentioned earlier, slopes downward, the supply curveSupply CurveSupply curve represents the relationship between quantity and price of a product which the supplier is willing to supply at a given point of time. It is an upward sloping curve where the price of the product is represented along the y-axis and quantity on the x-axis.read more has an upward sloping curve. The buyer’s paying capacity and willingness at a specific price is demand. In contrast, the quantity the producers of those goods offer to their customers or consumers at a particular price is supply.Demand, as stated earlier, has an inverse or the opposite relationship with supply. If demand decreases, then supply increases and vice versa.Demand has an opposite or indirect relationship with the price. If the price of the goods increases, the demand decreases. Similarly, if the price of the goods decreases, then the demand increases. However, on the flip side, the price directly relates to supply. If the price decreases, the supply will also decrease, and if the price increases, supply also increases.Demand represents the consumer or customer’s preferences and taste for a product or the commodity he demands. But, on the other hand, supply represents the firms, which is how much of the goods or items are offered by those producers in that huge market.

Comparative Table

Final Thoughts

The quantity supplied and demanded equilibrium helps the firm stabilize and survive in the huge market. However, while the disequilibrium does have many severe effects on the firm or the markets, other products and the whole economyEconomyAn economy comprises individuals, commercial entities, and the government involved in the production, distribution, exchange, and consumption of products and services in a society.read more will suffer.

This article is a guide to Supply vs Demand. We discuss the top differences between supply and demand along with infographics and a comparison table. You may also have a look at the following articles: –

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