2007-03-15 12:30:25 · 7 answers · asked by LAROCA 1 in Business & Finance ➔ Investing
demand = I want this product
supply = I have this product for sale
2007-03-15 12:36:25 · answer #1 · answered by Biz Guru 5 · 0⤊ 1⤋
Supply and demand is easy. Supply is how much is available, demand is how much is needed. Wanting something is not demand.
If the supply is low and the demand for that product or service is high, the price will go up. If the supply is high and demand is low, prices will go down.
Take the housing market. In some parts of the country the housing market is bottoming out. To much supply, not enough demand. In other parts of the country, there are not enough houses for all the people moving into the community, so the prices are going up. People in those areas can get top dollar for a beat up shack.
If you supply the product and I have a great need for your product, you set the price. If you supply the product and it isn't in great demand, you have the average price. If you are having problems supplying the product and there is high demand for that product, prices rise.
Think gas prices. The demand for gasoline gets greater and greater, while the supply is being limited the price goes up.
2007-03-15 19:43:55 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Demand in economics means "effective demand" i.e. demand that is expressed in a willingness to part with cash for the product or service. You may "want" a Ferrari but it is not effective demand unless you have the means to buy a Ferrari. Otherwise demand would be limitless. In other words, demand is the extent to which you are prepared to part with your income or wealth to buy something. Of course, if you decide to buy a car you have less money to buy other things. Generally a higher price decreases the demand - think movie tickets etc.
Supply is the wiliness of people or businesses to produce products or services at a certain expected price level for said product or service. If the expected price is high then more product or service will be supplied. If the expected price is low then the supply will be lower. For example, if a PC sold for $1200.00 you will have more computers being produced than if the going price of computers was only $600.00.
Usually demand decreases as the price increases and supply increases. The market -clearing price is where the amount sold equals the supply offered.
(In real life this only applies to markets like the stock or commodity markets.)
2007-03-15 21:44:30 · answer #3 · answered by rarguile 6 · 0⤊ 0⤋
The best example I can think of is the PS3s at christmas time. They were in short supply and highdemand around Cristmas time. Because of this, PS3s were selling for thousands on Ebay. Now PS2s are common and not in demand any more, the prices are dropping.
2007-03-15 19:35:09 · answer #4 · answered by soaplakegirl 6 · 0⤊ 0⤋
supply is what you make, and how much you have. Demand is how much is comsuned, bought, or used.
2007-03-15 19:33:18 · answer #5 · answered by ? 3 · 0⤊ 1⤋
If there is a demand for anything,anything at all,there will always be a supplier .
2007-03-15 19:40:11 · answer #6 · answered by siaosi 5 · 0⤊ 1⤋
A principle in economics.
2007-03-15 19:37:16 · answer #7 · answered by csucdartgirl 7 · 0⤊ 1⤋