Difference Between Supply vs Demand
Supply and demand are two macro-economic factors that are being addressed often at every forum and discussion point. The two major terms are often used by economists, bankers but what are the meaning and the rationale behind discussing these points. In this Supply vs Demand article, we will look at the two terms in detail and try to understand the key difference between the two widely used macro-economic terms, which are often simple but are complicated when one looks into it in detail.
Head to Head Comparison between Supply vs Demand (Infographics)
Below is the top 4 difference between Supply vs Demand:
Key Differences between Supply vs Demand
Both Supply vs Demand are popular choices in the market; Let us discuss some of the major differences:
- Demand refers to the available demand of a particular product or thing in the market; in other words, how much of that quantity does the customer desires and wants to purchase is called demand. Supply, on the other hand, refers to the availability of that product with the vendor or the manufacturers of that product in the market and how much of that the supplier is willing to sell in the market.
- A demand for a product is derived from a number of factors: the availability of a product, the income level of a customer, customer preferences of that particular product, and availability of an alternative product in the markets. On the contrary, the supply of a product depends on a number of factors: the Number of suppliers of that product in the market, nature of the product, scarcity of the resources to produce the product, and various other factors.
- Demand always represents the customer, i.e., it tells us about the customer demand and preferences of the product and the customer likes and dislikes of the product. On the other hand, the Supply of a product refers to the firm or the supplier, which tells us about the supply and the availability of various products in the market. It also tells us how much of the product the supplier can supply for a given period.
- The law of demand states that demand is inversely related to the price of the product; that is, with an increase in the price of the product, the demand for that product decreases and vice versa. On the other hand, the law of supply states that the supply of a product is directly related to the price of the product, which states that with an increase in the price of a product, the quantity supplied for that product increases,s and vice-versa.
- Supply is a simple principle that is used to determine the price of a product through the suppliers perspective, and it is most commonly used in economies, whereas demand, on the other hand, is a simple principle to determine the price of the product through the customers perspective and it is also commonly used in economics.
Supply vs Demand Comparison Table
Let’s look at the top 4 Comparisons between Supply vs Demand.
|
Supply |
Demand |
| The supply of a firm or a company is generally upward sloping nature. | Demand is always downward sloping in nature as it is inversely related to the price of the product. |
| The supply of a product increases when the demand for the product increases and decreases when the demand for a product decreases. | Demand increases when the supply is held constant of a product and decreases when the supply of a product increases. |
The supply of a good depends on the following factors:-
|
The demand for a good depends on the following factors:-
|
| A demand for a product is derived from the bargaining power of the customer. | The supply of a product is derived from the bargaining power of a supplier. |
Conclusion
In today’s world, even a slight change in the price of a product can have a huge impact on the Supply vs Demand of goods and services. Equilibrium in the market is achieved when the demand of the goods meets the supply of that good. The market is said to be in equilibrium, and the transaction between the supplier and the customer will occur at that equilibrium price. Any price is other than that; the transaction will not happen.
It is very important for both the customer and the supplier to strike a balance between the price of the product in order to fulfill needs and wants.
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This has been a guide to the top difference between Supply vs Demand. Here we also discuss the Supply vs Demand key differences with infographics and a comparison table. You may also have a look at the following articles to learn more.
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