To have a complete understanding of the market mechanism, it is essential to have the right idea about both demand and supply and their differences. These are the two main forces that are crucial in regulating the entire market of any kind. The supply market analysis is elaborately discussed below.
What is Demand?
In terms of Economics, demand implies the quantity of a good or product that the consumers are able and willing to buy during a specific period of time. The relation between demanded quantity and price is known as the demand curve.
The demand for any product or good that a consumer chooses depends on their income and the price of the good. The law of demand shows an inverse relationship between the quantity demanded and the price of the good.
What is supply?
In terms of Economics, supply is the specific amount of any product or goods that are available for the consumers. Supply has a relation with the specific price or the available amount of the good.
The supply of a good can be influenced by the cost of production, technology, and also governmental policies. Supply can be divided into two types, such as market supply and Individual supply.
What is the market?
A market is a specific place where both the sellers and buyers are involved in exchanging goods at some specific price. In a market, these two aspects, known as demand and supply, have an important role in influencing the decisions of buying. So, the attitude of the buyers can be defined with the help of the knowledge of demand. The attitude of sellers can be understood with the use of the concept of supply.
What are the key differences between demand analysis and supply analysis?
Now, let’s discuss these two factors known as the demand analysis and supply market Analysis.
- Demand is actually the investing capacity and will of a buyer at a certain price. Whereas, supply is the specific amount offered by the producers and providers to the buyers at a certain price.
- Demand has an indirect yet powerful relation with the price of a specific good. Such as, if the price increases, the demand for a certain quantity usually decreases and vice versa.
- Supply has an evident relationship with the price of a good, like when the price of a good or product increases, the supplied quantity also increases and vice versa.
- When the demand for goods increases, but the supply remains unchanged or constant, it may lead to a real crisis. However, when the demand for goods decreases, and the supply remains unchanged, it actually results in a surplus.
- Demand for a certain product can be triggered by five important factors, like – Number of Consumers, Income of the consumers, Taste, and Preference, Price of Related Goods, Expectations of the consumers.
- Supply for goods depends on the factors like the price of the resources, technology, taxes and other subsidies, number of the producers, expectations of the consumers.
Thus, the continuous changes in the supplier management tasks and increasing demand for savings have turned the supply market analysis into a very important business element.
So, in recent days, the supply market analysis and good knowledge regarding the demand of a product have become two really important aspects of managing any market properly.