Supply vs. Demand: What’s the Difference?
The main difference between supply and demand is that supply refers to the amount of a product or service that is available whereas demand refers to the willingness and ability of consumers to purchase that product or service.
Before we move to more differences, let’s first understand Supply and Demand:
- Supply: Supply refers to the total amount of a good or service that producers are willing and able to offer for sale at a given price and time.
- Demand: Demand refers to the total amount of a good or service that consumers are willing and able to buy at a given price and time.
Now, let’s get to Supply vs Demand:
Major differences between Supply and Demand
| Supply | Demand |
|---|---|
| Supply is influenced by factors such as production costs and technology. | Demand is influenced by factors such as consumer income and preferences. |
| Changes in supply can be caused by factors such as changes in the cost of production or changes in technology. | Changes in demand can be caused by factors such as changes in consumer income or changes in tastes and preferences. |
| The law of supply states that as the price of a good or service increases, the quantity supplied will also increase. | The law of demand states that as the price of a good or service increases, the quantity demanded will decrease. |
| An increase in price often leads to an increase in supply as suppliers seek to profit from higher prices. | An increase in price often leads to a decrease in demand as consumers seek more affordable alternatives. |
| The quantity supplied is determined by the cost of production, the price that producers can receive for the product or service, and the availability of resources. | The quantity demanded is influenced by factors such as the price of the product or service, the income of consumers, and consumer preferences. |
So, these are the main differences between the entities.
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