The concept of supply and demand is one of the most important concepts in the field of economics and they are the backbone on the entire economy. The demand is how much or what quantity of product or the service is being given to the buyers. The quantity demand is the product amount that people mainly think to buy at a particular amount of time. The relationship between the price and the quantity demanded is also known as the demand relationship. The supply mainly represents how much the present market can offer you. The quantity supplied is the amount of goods that are offered by the good producers after getting the certain amount of price. The relation between price and how much good is the service is supplied to the market is actually the supply relationship.
The main relationship between the demand and the supply lies behind the allocation and the availability of the resources. According to the market economy theories, the demand and the supply theory generally allocate the resources in the most efficient manner. If you are doing the Demand v/s supply homework for the economics subject, then it is very important that you know the rules and the laws. Here are the rules that are described below-
- Law of demand
The law of demand states that, when all the factors are remaining equal, the higher the price, the matter is good. Less people will demand that particular good. In other ways, the higher the price, the less demand as the price of the product when goes up, the opportunity of buying the item becomes less. These results in people will avoid buying the item and this will force them to buy other item of the same category.
When doing the Demand v/s supply homework, knowing this graph is very important. Here, in this graph, the A, B and C are the points on the demand curve. Each of the points on this graph reflects the direct relation between the quantity and the price. So, at the point A, the quantity demand will be at the Q1 and the point A, the quantity demanded will be the Q1 and the price will be the P1 and so on. This curve declares the negative relationship between the price and the quantity. The higher the price of the item; lower demand of the item.
- The law of supply
When you are doing the Demand v/s supply homework, it is very important to know about the law of supply. This is also indicated by the graph that is depicted here.
As like the law of demand, the law of supply mainly indicates the quantities that will be sold at the particular rate. But, this graph is little different. Here, the supply relationship has the upward slope. The means that the higher the price of the item, more the item is supplied. Producers generally supply the products at the higher price, as selling the higher quantity at more price generally increase the revenue.
Here, in the graph; A, B and C are the points on the curve. Each point on this particular graph directly relates the relation between the quantity and the price. At the point B, the quantity supplied will be Q2 and the price is P2.
The Basic Underlining Difference:
With the above quoted two spheres of demand and supply supported by graphs, it can be said; the marketâ€™s backbone is crafted and developed by these two. As has been stated above, while it is the demand which gives a rough idea of the consumption sought after by the buyers, the real relation exists between the price and the quantity that really goes for sale. The supply when seen from the same perspective determines the offering available from the market. It is the price adjudged in the end and the supply in correspondence to it that sets up the supply relationship.
At the end the price of a commodity thus is an influence both the traits of supply and demand.
The Equilibrium Concept:
From a laymanâ€™s perspective, a market is said to be resting in equilibrium when the price of a good or service remains unchanged for a long time. And from a more detailed perspective, it is when the quantity in demand from the customers remains equal to that of the supply from the suppliers. It is eiter with the slightest pretext of change in demand or supply that the whole quantity and price also changes.
The Business Goals:
For any business organization it is the goal of creating enough profit to sustain a whole team of employees as well running the organization in a whole. Time and again it is the supply chain of goods that gets identified for creating the pathway to achieving organizational goals like that of profit. A demand and supply planning procedure undoubtedly calls for information that has to be accurate and along with the traits of
- Qualitative Data and
- Quantitative data.
It is only then the forecasting regarding the demand and supply of any businessâ€™s functioning can then be measured.