Difference Between Supply and Demand

There are many Economic factors on which any country is based off. They are the basic factors which help in regulating the market as well ad the export and import.


Business Quiz

Test your knowledge about topics related to business

1 / 10

Whose Liability is limited to the extent of his capital to the firm?

2 / 10

Individual Ownership is called as?

3 / 10

Wages and taxes that a company pays are examples of:

4 / 10

Membership in a Co-Operative Society is?

5 / 10

A Company is called an artificial person because _________.

6 / 10

Which of the following countries are part of the WTO?

7 / 10

Who is not entitled to the share of profits?

8 / 10

When at least 51% shares are in the hands of government, it is called as __________.

9 / 10

Overall and strategic planning is done by the ___________.

10 / 10

__________ scale firms enjoy economies of scale.

Your score is


Such two macro-economic factors are Supply and Demand that are often used by bankers, economists and are a discussion point. They are interrelated to each other yet very different from each other.

Key Takeaways

  1. Supply refers to the amount of a product or service available in the market, while demand refers to the desire or need for that product or service.
  2. When the supply of a product is high and the demand is low, the price decreases, while when the supply is low, and demand is high, the price increases.
  3. The equilibrium point is where supply and demand are equal, and the market balances.

Supply vs Demand

The difference between supply and demand is that supply refers to the amount of the products required by the customers, and Demand refers to the need of the products which the suppliers are expected to supply. Supply and Demand are inversely related, and when one goes up, the other goes down.

Supply vs Demand

Want to save this article for later? Click the heart in the bottom right corner to save to your own articles box!

Supply is supplying the products and commodities for the customers to use on their demand. They are increased when the price increases, and usually, when the demand increases, the supplies go down.

This shows how much suppliers can give and make available the products to the customers and their willingness about the product.

Demand is the need and want of the customers and buyers for products at a specific period. The more the customers like the products, the more the demand will be.

If the price increases, then the demand also will get decreased. Demand usually represents how much the buyer likes the product and their preferences.

Comparison Table

Parameters of ComparisonSupplyDemand
DefinitionSupply refers to the number of products or services provided to the clients and customers who are willing to buy them in an open market.When the clients or customers want to receive or buy products or services in a given period of time in an open market.
Inter-relationship When the supply becomes surplus, the demand gets decreased.When the demand is high, the supply goes less.
RepresentsIt represents that how much are sellers are willing.It represents that how much the customers and buyers are willing for the products.
Effects of priceWhen the price increases, the supply also increases and is related positively to the price.When the price falls, the quantity of demand increases and is inversely related to price.
CurveIt is always represented as upward sloping.It is always represented as downward sloping.

What is Supply?

Supply is the amount and quantity of commodities and products to be given and sold to the buyers and customers at a specific period of time.

Laws regarding the Supply of products states that the higher the price of the goodwill is, the higher the quantity of the products to be supplied. The supply is positively proportional to the price of the goods.

When talking about the supply curve, there generally remains an upward sloping curve. The supply increases when the demand is high and goes down with the decrease in demand which leads to a shortage.

There are certain factors on which the supply is based on such as the price of the commodities or services, the number of suppliers in the market, any changes made in the technology, status of nature, price increment in the future, etc.

Usually, the bargaining power of the suppliers in the market drives the supply of the products. Supply not only represents the willingness of the suppliers but also tells about how much the products are able to be supplied for the given period of time.


What is Demand?

Following opposite from that of the supply, Demand is the willingness of the customers to buy any product and service that they want.

The laws about Demand say that the higher the price of the products, the lower will be the demand for that product and good. They are inversely and negatively related to the price as less demand will be there.

If the supply of the products is the same and demand increases, there will be shortages and vice versa. The sloping curve is always downward for demands.

There are also some factors which influences the demand such as how much incomes do the customers have, the buyer’s taste and preferences, price of other and related good in the market, the population of the area, the number of substitutes that can be used in place of the original, etc.

It all deepens the bargaining power of the customer for the given product.


Main Differences Between Supply and Demand

  1. Supply is termed as making available the products or services to the user and customers for them to use, whereas Demand is termed as the need of the product or services by the customers to the sellers for them to use.
  2. Supply is positively related to price and increases as the price increases, whereas Demand is inversely related to price and the demand becomes lower when the price goes high.
  3. The supply curve is an upward slope, whereas Demand is represented as a downward slope.
  4. Supply represents the willingness of the sellers and firms to sell the products, whereas Demand expresses the willingness of the customers and buys for the products.
  5. Both supply and demand are inversely related, and when one goes high, the other one goes low.
  6. Supply is derived by the bargaining power of the one who supplies the product, whereas Demand is derived by the bargaining power of the buyer of the products.
  7. Supply is the representation of the stock availability of the product by the seller in the market, whereas Demand is the representation of the tastes and preferences of the customers and buyers for the products.
Difference Between Supply and Demand
  1. https://www.jstor.org/stable/24490348
  2. https://academic.oup.com/qje/article-abstract/107/1/35/1925833
One request?

I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️

Leave a Comment

Your email address will not be published. Required fields are marked *