Supply and Demand Relationship

Supply and Demand is the relationship between the quantity of a commodity that producers have available for sale and the quantity that consumers are willing and able to buy.

supply and demand relationship

 Demand depends a lot on the price of the commodity, the prices of related commodities, and consumers' incomes and tastes.
Supply depends not only on the price obtainable for the commodity but also on the prices of similar products, the techniques of production, and the availability and costs of inputs.

The function of the market is to equalize demand and supply through the price mechanism.

If buyers want to purchase more commodity than those available on the market, the price will went up.
If there are more commodity available than needed, suppliers will decrease the price.

So, there is a tendency toward an equilibrium price at which the quantity demanded equals the quantity supplied. The responses toward supply and demand changes along with the price.

the equilibrium between price and quantity

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