Why do the reasons that affect demand differ from the ones that affect suppy. Basically what I am trying to say is what is the difference?
2007-10-05 10:31:31 · 2 answers · asked by Karen R 1 in Social Science ➔ Economics
The supply is the amount/quantity of an item. Demand is the number of people wanting to buy that item.
For example, let's say there is a supply of 10,000 Ford trucks and a 'demand' to buy these trucks by only 8,000 customers at the current price. Ford will have to lower the truck's price to 'find' more customers, and thus, sell all of the trucks.
On the other hand, if Ford has 10,000 trucks and 12,000 customers want to buy those trucks, Ford can increase the price of the trucks to 'eliminate' the 2,000 'excess' customers.
In a free market, price is always proportional to the supply and demand.
Hope this helps.
2007-10-05 11:40:35 · answer #1 · answered by Doctor J 7 · 0⤊ 0⤋
See ECONOMICS IN ONE LESSON
http://www.mises.org/books/onelesson.pdf
2007-10-05 13:19:36 · answer #2 · answered by Anonymous · 0⤊ 0⤋