What Is The Relationship Between Supply And Demand As A Subject?

Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price. The relationship between price and the quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.

The relationship between demand and supply provides the forces behind the allocation of resources. In market economy theories, demand and supply will allocate resources in the most efficient way possible. The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded. The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of buying that good. As a result, people will naturally avoid buying a product that will force them to forgo the consumption of something else that they value more.

Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.

Unlike the demand relationship however, the supply relationship is a factor of time. Time is important to supply because suppliers must, but cannot always, react quickly to a change in demand or price. So it is important to try and determine whether a price change that is caused by demand will be temporary or permanent.

The concept of supply and demand is one of the most fundamental and important concepts of economics. It is an economic model based on the price and availability of a product in a market. Theoretically, the model suggests that in a perfectly competitive environment, price will function to maintain equilibrium with the quantity demanded by consumers and the quantity supplied by producers.

In order to understand thing better, it is essential to know what supply and demand means. Supply is the quantified measure of a product or service that is made available in the market by sellers whereas demand is the quantified measure of a product or service that is required by buyers in the market. The relationship between supply and demand has a great deal of influence on the price of goods and services.

The law of demand states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.
The law of supply states that, all other factors being equal, the higher the price of a service or good, the more it will be supplied. As people expect more profits from a product, they naturally produce more of that product.

However, there is a lot of disparity between theory and real life. There are a lot of shift factors which might influence the laws of supply and demand. Such shift factors include the income of people, general market sentiment, and ever-changing preference of some goods over the others etc… This can be suitably explained by the dynamic law of supply and demand which states the following:

• If quantity demanded is greater than quantity supplied (excess demand), prices tend to rise; if quantity supplied is greater than quantity demanded (excess supply), prices tend to fall.
• The larger the difference between quantity demanded and quantity supplied, the greater the pressure for prices to rise (if there is excess demand) or fall (if there is excess supply.
• When quantity demanded equals quantity supplied, prices have no tendency to change.

These theories can be considered more suitable when discussing real life economy. When there's an excess of supply and lesser demand, then suppliers have to reduce prices until people want to buy all their extra stuff. The suppliers are desperate to sell all excess products. However, when there's great demand and no supply (there's scarcity), people are willing to pay any price as long as they get the desperately needed, but rare, product. Thus, the market for any product tends to push its price towards equilibrium. Of course, perfect equilibrium is never reached as the supply and demand curves are constantly shifting. The market adjustment is always going on.

As known that the quantity demanded have a negative relationship with the price
while the price increases, the quantity demanded decreases , and the opposite .
Otherwise, increasing in the demand will cause an increasing in the price ,
about the quantity supplied have a positive relationship with the price , while the price increases the quantity supplied increases , and the opposite.
But the major thing is what is the relationship between the demands and supplies ... Which is (( a positive relationship )) whenever the demands increase the supply of its products will increase .. And the opposite .

Relationship between supply and demand:
If the supply is less, the demand will be high. Likewise if the supply is more, the demand and cost will be less.