What are supply and demand curves

Consider the following scenario: you go to the market to fill up on vegetables, but onions have had a poor year, and stocks are low. Even if the price has risen since last week, you accept the increase and buy them nevertheless. On the bright side, there’s a bumper harvest of tomatoes this year. Growers are eager to sell as many as possible before their food rots, so they’ve cut their prices to reflect this. But you’re not in a hurry because you know they’ll be much cheaper if you come back later in the day. The basic laws of supply and demand are so clear to most of us as consumers that they’re virtually second nature: numerous items are cheap; scarce ones cost more. In business, however, these concepts are applied in a more nuanced manner to determine how much product buyers might buy at various pricing, as well as the quantity you should give to the market to optimize your revenue.

The Law Of Demand

Demand refers to how much product buyers are willing to buy at various price points over a given period of time. We all have limited resources, therefore we must choose what we are willing and able to purchase.

The Law Of Supply

While demand is concerned with the consumer’s desire to earn a profit, supply is concerned with the seller’s desire to make a profit. A supply schedule illustrates how much product a supplier is ready and able to give the market at specific price points over a set period of time

Supply Curve V/S Demand Curve

The supply curve shows the relationship between the purchase price and the quantity supplied. Because of the possible profit, suppliers are often prepared to deliver more products at a higher price point. On your graph, this appears as an upward-sloping curve.

In most cases, the demand curve demonstrates a clear relationship between the purchase price and the amount purchased. The more expensive a product is, the fewer people can afford it, and the fewer people will purchase it. This is known as an “inverse correlation,” and it appears on your graph as a downward-sloping curve. Of course, companies may opt to raise the price if a product is in strong demand. While this may reduce demand, your graph may show that it is still within the organization’s scope. This is why it’s critical to understand where your equilibrium is. The equilibrium is the point at which your supply and demand curves cross. This is the point at which all goods have been sold and no demand remains unsatisfied. This shows that you’re maximizing your potential revenue, both by avoiding sales lost due to stock shortages and by eliminating the expense of unsold products.


To summarise, A variety of factors can influence supply and demand, as well as the trends you see in your supply and demand graph. Income, which is directly tied to the price point that consumers are ready to pay, is an important component that influences demand. Similarly, scarcity is one of the defining elements that can influence a product’s supply.

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