Demand and Supply

Generally, the quantity of goods that a person is willing to buy at a certain price at a given time is called the demand for that commodity. Here are the three features hidden in ‘willing to buy’ statements.

First, the person must have the desire to buy the product,
Second, he must have the money to buy the product, and
Finally, he must have the desire to spend money.

Example: Suppose a person goes to the market to buy potatoes. He went to the market and saw that the price of one kg of potato was 10 Dollar. Now he has to have the desire to buy 2 kg of potatoes, he has to have 20 Dollar or more in his pocket and he has to be willing to spend that money. Only then can it be said that the demand of that person for potatoes is 2 kg.

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In the general sense, supply refers to the quantity of goods that are available for sale at conventional prices in the market. But in the economy, supply is the quantity of goods that sellers / suppliers are willing to sell at a certain price at a given time. So, at a given time, a seller ready to sell the quantity of a product at a certain price is called supply of that product.

For example, suppose a potato grower brings 15 kg of potatoes to market for 10 dollar per KG. Now this 15 kg is the supply of potatoes. If he comes to the market and sees that the price of potato is 9 dollar per kg and then he is reluctant to sell the potato then 15 kg can no longer be called supply.

According to the Law of demand, if other conditions remain unchanged, the demand increases when the price goes down and the demand goes down when the price goes up. On the other hand, according to the Law of supply, if other conditions remain unchanged, supply increases when prices rise, supply decreases when prices fall.

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