Difference Between Demand and Supply. Demand and supply are at the core of the functioning market mechanism. What do these categories represent, what are their characteristics, and how does demand differ from supply? Let’s delve into this in more detail.


Demand refers to the desire of the population for a particular product.

Supply is the intention of a producer to bring their products to the market.


In one case, the initiative comes from the potential buyer, while in the other, it comes from the manufacturer (seller). Both categories are characterized by quantity. Regarding demand, this is expressed in the amount of goods that a consumer intends and is capable of purchasing, whereas for supply, the quantity represents the maximum production put forward for sale.

Another common indicator is price. Let’s examine the difference between demand and supply in terms of price. In the case of demand, the price is the highest amount a potential buyer is willing to pay for the desired product. For supply, this parameter represents the minimum amount required by the seller for their product.

These characteristics – quantity and price – are interrelated, and their relationship is formulated in the corresponding principles. The first of these is the law of demand. Its essence is that the more expensive a product is, the less it is demanded. This inverse relationship can be illustrated graphically as follows:

Meanwhile, the law of supply states that an increase in price leads to a willingness of the producer to supply more goods, while a decrease in the price of a product leads to a decrease in supply. This demonstrates a direct relationship between these two factors, and the graphical representation would look like this:

Both laws are formulated considering the main factor – the price – that influences the change in the quantity of demanded or supplied products. However, there are other reasons that explain the variability inherent in these categories.

What is the difference between demand and supply concerning these additional factors not related to price? The difference lies in the fact that demand is also influenced by factors such as the level of consumer prosperity, their personal preferences, the cost of similar goods, seasonality, and other nuances. On the other hand, supply may depend on factors such as production costs, tax and subsidy levels, technology used, anticipated price increases or decreases for the produced items, and more.