Demand Curve vs Supply Curve
Demand and supply are fundamental concepts in the study of economics that are very closely related to one another. Demand looks at the buyer’s side, and supply looks at the seller’s side. The demand and supply curves are graphical representations of the law of demand and law of supply and demonstrate how quantity supplied and demanded change with changes in price. The following article provides an overview of supply and demand in general and explains the differences between demand and supply curves.
Demand Curve
Demand is defined as the desire to purchase goods and services backed by the ability and willingness to pay a price. The law of demand is an important concept in economics that looks at the relationship between the price and quantity demanded. The law of demand states that as the price of a product increases the demand for the product will fall, and as the price of a product falls the demand for the product will increase (assuming that other factors are not considered). The demand curve is the graphical representation of the law of demand.
The demand curve can be drawn on a graph that shows the price on the y axis, and quantity on the x axis. The demand curve will slope downwards from left to right since it shows an inverse relationship that exists between price and quantity demanded. For example, if the price of the product is $10, the quantity demanded will be 100. As price increases to $20, demand will fall to 50, and when price further increases to $30 demand will fall to 25. Plotting these points on a graph will show a downward sloping demand curve from left to right.
Supply Curve
Supply is the amount of goods and services that a producer is willing to supply to the market place for a given price. Supply will show the relationship between the quantity that a producer is willing to supply and the price for which producers are willing to sell their products. The law of supply states that the quantity supplied will increase as the price of product/service increases, and the quantity supplied will decrease as the price of the product falls.
The supply curve graphically represents the law of supply, where the y axis will be price and x axis will be quantity supplied. The supply curve slopes upward from left to right, as it shows a direct relationship between price and quantity. If the price of a product is $5 the supply will be 50 units, when the price increases to $10 supply will increase to 100 and so on. If the price falls to $2 supply will fall to about 20 units.
Demand vs Supply Curve
Demand and supply are concepts very closely related to one another in the study of economics. However, despite their close relationship the two concepts are quite different. Demand curve looks at the consumer’s side for buying goods and services, and the supply curve looks at the producer’s side for selling goods and services.
For demand, price and quantity have an inverse relationship (move in the opposite direction) as price increases quantity demanded falls as people buy less at high prices. As for supply, price and quantity have a direct relationship where supply increases and price increase where the producer will supply more at higher prices. The point at which both supply and demand curve meet is the equilibrium point at which demand is equal to supply.
Summary:
• Demand curve looks at the consumer’s side for buying goods and services, and the supply curve looks at the producer’s side for selling goods and services.
• The demand curve will slope downwards from left to right since it shows an inverse relationship between price and quantity demanded.
• The supply curve slopes upward from left to right, as it shows the direct relationship between price and quantity.