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Meaning of Demand and Supply

Meaning of Demand

Demand is the amount of demand for goods and services of consumers which has 3 components is purchase demand willingness to pay purchasing ability. The demand for a particular product and service refers to the quantity demanded for that product and service that consumers want to buy at a particular time at various price levels of the product and that kind of service demand in terms of this demand It is a demand that has purchasing power. That is, when consumers want to buy, they must have enough money. and are willing to pay for the purchase of that service as well. Therefore, it is considered to be demand for goods and services.

There are three types of demand:

1. Price demand refers to the amount of demand for goods and services at different price levels of the market
2. Demand-to-income is the amount of demand for goods and services at different income levels of consumers
3. Cross-demand refers to the amount of demand for goods and services at different price levels. of other types of products that can be substituted

The law of demand is the relationship between the quantity of demand for goods and services of consumers is always inversely proportional to the level of the price of that kind of goods and services. But if the price of goods and services decreases will make consumers want to buy more products and services

Factors that determine consumer demand are as follows:

1. Price of goods and services is the most important factor. by cheap goods and services, demand for purchase (Demand) is high. On the other hand, goods and services are expensive. purchase demand (Demand) will be less.

2. Consumer income If consumer income increases purchase demand (Demand) will increase. On the other hand, if consumer income decreases. purchase demand (Demand) will decrease accordingly.

3. Consumer tastes If the product meets the tastes of consumers very much the demand (demand) will be high.

4. Seasons The demand for purchasing is seasonal. for example, In winter, the demand for sweaters will increase.

Meaning of Supply

Supply is the amount of demand for goods or services offered by the manufacturer or entrepreneur with the willingness to offer and be able to procure, sell or provide services at any time. At the same time, at various price levels that the market has set, it consists of 2 parts: willingness to offer and ability to procure and sell. In the sale of goods by the manufacturer or seller at any one time. If the product level changes over time or setting market prices. The number of goods and services that will be offered for sale will also change. If the price of goods and services in the market at that time high price level.

Manufacturers or sellers will produce or offer for sale in large numbers. But during times when the goods and services in the market decline or can be sold at a low price The manufacturer or seller will not bring the product out for sale. or reduce the number of sales

The law of supply is the relationship between the volume of demand for goods and services offered by the producer. will always be directly proportional to the price level of that product and service, that is, If the price of goods and services increases, the demand for the producers to sell goods and services increases. But if the price of goods and services decreases This will cause manufacturers to have lower demand for goods and services.

The factors that determine the supply of consumers are as follows:

1. Price of goods and services. The supply of goods is the most important factor. by high-priced goods and services. The demand for the offering (supply) is high. On the other hand, low-priced goods and services. The demand for the offering (supply) will be low.

2. Production process If producing products with modern equipment at a low cost. The demand for sale (supply) per product will increase.

3. Product price predictions If the manufacturer expects the product to have a higher price in the future. The manufacturer will slow down the current production. Then gradually produce in the future to increase profits.

4. State tax measures If the government reduces tax on any type of product will result in lower costs The manufacturer will produce a lot of products resulting in more supply as well.