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Difference Between Supply and Demand

Supply vs Demand

Supply and demand are basic economic concepts that are usually applied in a market environment where there is a presence of a manufacturing firm and consumers. Both are also components of an economic model which is an instrument in determining the price and quantity of a particular product in a given time or place.

“Supply” is defined as “the amount of goods or services that can be provided by a company to its consumers or clients in an open market” while “demand” is said to be “the willingness of the consumers or clients to buy or receive products or services from a firm in the same open market.” These concepts are always present in every economic activity – whether in business and anyplace where economic exchange is present.

In economics, both concepts also adhere to their own respective laws. The law involves a particular concept and its relationship to the price and its counterpart concept. The law of supply states that the supply and price are directly related. If there is an increase in price, the same increase applies to the supply due to the owner’s increased production and expectation of profits. If the price goes down, there is no reason to increase production.

On the other hand, the law of demand conveys the inverse relationship between price and demand. If the demand is high, the price goes down to make the product more available, and the reverse happens when the demand is low while the price goes up to make up for the product costs. Both laws only apply as there are no factors considered except for price and quantity.

“Supply” is determined by marginal costs and requires the company as a perfect competitor. On the other side, marginal utility characterizes demand. In “demand,” the consumer is the requirement as the perfect competitor.

To observe both changes in demand and supply, they are illustrated in a graph. The price sits on the vertical axis while the horizontal axis is where the demand or supply is placed. In illustrating the relationship with supply or demand with the price, it results in a curve. The curve that illustrates the supply is the supply curve which has an upward slope. Meanwhile, the curve for the demand is called the demand curve which has an opposite direction, the downward slope.

Aside from the demand curve and the supply curve, there are also two types of curves that can exists in the graph – the individual demand or supply curve and the market demand or supply curve. The individual curve is a micro-level representation of a particular consumer or firm’s demands and supply while the market curve is a macro-level image of a market’s demand or supply

Supply and demand have different determinants. Supply considers the following as its factors – production cost of the product or cost of service, technology, the price of similar products or services, the company’s expectation for the future, and number of suppliers or employees.

On the same note, demand also has the determinants which often reflect on the consumers like income, tastes, preferences, variety of price on a parallel product or service.

The balance or the combination of supply and demand is called equilibrium. This event happens when there is enough supply and demand for a product or service. Equilibrium seldom happens since information is vital to the event. If information is withheld from both sides, it does not happen. Equilibrium happens both on an individual or market level.


1.Supply and demand are elementary, economic concepts that exist in any economic activity as long there is a product or service with a price.
2.Supply and demand have an inverse relationship with each other. If one is up, then one is going down.
3.Both supply and demand have their own laws regarding price, and each has their own curve when illustrated in a graph. Supply has a direct relationship with price with an upward slope in the supply curve. Meanwhile, demand has an opposite and inverse relationship with price, and the demand curve is illustrated as a downward slope.
4.Both concepts have their own determinants. Supply’s determinants reflect the firm while determinants of demand reflect the consumers.

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  1. Supply is the amount of producy available for purchase.Demand is the wish of the people to buy a product a certain price.

  2. supply is the amount ready for sale ..
    demand is the amount which one’s desire of according to his ability to pay willingly .
    demand curve downward from left to right where supply curve right to left ..

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