The two driving forces of the market and also the economy, that is question is offer . The question implies the desire for a good, supported by skill and readiness to pay for it. On the other hand, the supply refers to the total quantity of goods ready for sale. When the demand increases, there is a shortage of supply and when a sufficient supply the demand is reduced, then there is one inverse relationship between these two elements.
Nowadays people are very selective about the things they use, wear and wear. They are very aware of what to buy and what not? A small change in prices or the availability of a commodity drastically affects people. A small imbalance in these two hurts the entire economy. Read this article to understand the differences between supply and demand.
|Sense||The question is the desire of a buyer and his ability to pay for a particular commodity at a specific price.||The offer the quantity of a commodity made available by the producers to its consumers at a certain price.|
|Curve||Inclined downwards||Tilted upwards|
|Interrelation||When demand increases, supply decreases, ie the inverse relationship.||When supply increases the demand decreases, ie the inverse relationship.|
|Effect of variations||The demand increases with the offer that remains the same cause of scarcity while the demand decreases with the offer that remains the same door to surplus.||The offer increases with the demand that remains the same leading to surpluses while supply decreases with the demand that remains the same leading to scarcity.|
|Impact of the price||With an increase in the price the demand decreases and vice versa that is the indirect relationship.||The offer increases along with the price increase. So he has a direct relationship.|
|Who represents what?||Demand represents the consumer.||The offer represents the company.|
Definition of the question
In economics, demand represents the wishes and preferences of the customer for a particular product, for which he is ready to pay. The quantity (how much) of the product required at a certain price, ie the balance between the quantity requested and the price, the demand for a particular product.
The demand curve is an indicator of the inverse relationship between price demand and quantity.
The quantity of a particular product and services offered by producers or producers at a certain price for customers known as supply. The quantity (how much) of the product supplied at a particular price, ie the balance between the quantity supplied and the price known as the supply of that commodity or service. Represents the company.
The supply curve represents the direct relationship between price and quantity supplied.
Key differences between supply and demand
- The balance between the requested quantity and the price of a commodity at a given moment known as a demand. On the other hand, the balance between the quantity supplied and the price of a commodity at a given moment known as an offer.
- while the demand curve goes down, the supply curve rises.
- The demand is the willingness and ability of a buyer to pay at a specific price while the offer is the quantity offered by the producers to its customers at a specific price.
- Demand has an inverse relationship with supply, that is, if demand increases supply decreases and vice versa.
- The demand has an indirect relationship with the price, ie if the price increases the demand decreases and if the price decreases the demand increases, however, the price has a direct relationship with the offer, ie if the price increases the offer will also increase and if the price decreases it also decreases.
- The question represents the taste and preferences of the customer for a particular commodity requested by him, while the supply represents the companies, that is how much of a commodity offered by the producers on the market.
Factors that influence supply and demand
- Price of the goods If the price of the goods increases, then less demanded by people, because people find less usefulness in the product, and at that price they can buy other products that are more useful for them. In this way, demand decreases while supply increases.
- Price of inputs The price of the inputs has a great impact on the price of the goods, that is, if the cost of production increases, in the end it translates into a drop in demand and the supply for the goods decreases also because now the same amount less goods are produced and the other way around.
- Price of related goods It can be simply understood from an example: if the price of petrol or diesel increases, the demand for motorcycles or cars falls while its supply increases, but if the prices of petrol or diesel decrease, people can easily afford to travel on motorcycles or cars and this will result in increased demand while supply decreases.
- Replacement products This can also be understood from an example: if there is an increase in the price of a coffee, then most people will abandon their consumption of coffee and start consuming tea; we suddenly have an impact on demand and supply for both products, or the demand for the tea will increase and its offer will fall while the demand for coffee will fall and the supply will increase.
- Personal disposable income If there is an increase in the consumer's income, then a slight change in the price of the goods does not affect his supply and demand. While, if the consumer's income remains the same or decreases, then a minimum change in price will affect his supply and demand because the consumer has to spend more income on the same product he was previously buying at a low price. This way you either request less or switch to some other product.
- Consumer choices and preferences If the product offered by the supplier adapts to the consumer's choice, he will surely demand more and his offer will go down due to his high demand.
Money supply and demand
The amount of money needed for various purposes, such as the purchase of goods, the purchase of land, employment, etc., which creates demand for money in the economy. On the other hand, the money supply depends largely on the country's credit control policies, which are governed by the banking system of the economy.
The market flooded with numerous substitutes in each product category and a sudden increase or decrease in prices will have an impact on these products and their demand and supply may increase or decrease. In this situation, a balance must be maintained in the quantity requested and in the quantity supplied without neglecting the price factor to which the product is supplied.
The balance in the quantity demanded and supplied will help the company to stabilize and survive in the market for a longer duration, while the imbalance of these will have serious effects on the company, the markets, the other products and the entire economy will be affected overall.