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Whydemand is better than supply
Demandis an economic concept that is defined as the quantity of commoditiesthat consumers are able and willing and have the purchasing power tobuy at a particular price. Supply on the other side, is the amount ofcommodities that suppliers are willing and able to supply to themarket at a particular price (Guisan, 4). In the market context,demand is a better tool to study the market than supply. It isevident that demand determines the amount of commodities that thesuppliers will supply. If there is a high demand in the market, it isdefinite that the suppliers will strive to supply more commodities.In other words, demand is an economic concept that controls supply.Some economists would put it that supply is dependent on demand.Demand exists in the market whether supply is there or not. However,supply in the market is necessitated by demand (Guisan, 17).
Whereasboth supply and demand are said to influence prices in the market,demand seems to play a significant role in the determination ofprice. When consumers increase their demand of a particularcommodity, the suppliers will increase the price. The vice versa tothis principle is also true. In a country’s economic view,economists argue that governments tend to rely largely on demand sideof economics rather than the supply side of economics. If thegovernment needs to increase productivity, it can increase moneysupply to the people who actuate the demand concept. Theorists suchas Keynes who supported this theory argued that the government canincrease the populace purchasing power through printing more money orreducing taxes (Guisan, 62). This would lead to increase in demandand therefore increase in productivity. This is an indication of theimportance of demand in the economy of a country.
Demandcan also be used as a measure of economic progress for a country.When the demand is low for goods and services in country, it is anindication that the general populace has no money and therefore hasno purchasing power. This is a time when a government can adoptvarious policies and measures to increase money in circulation suchas printing more money. On the contrary, increase in demand of goodsand services indicate that the populace has enough disposable income,which in turn can be interpreted as the growth of the economy.However, it is imperative to note that too much money in the hands ofthe public can lead to inflation.
Itis clear that suppliers and producers only supply what consumersdemand. In other words, there cannot be commodities being supplied,if there is no demand for the commodities. It is therefore apparentthat demand side of economics determines what producers andmanufacturers will produce or manufacture (Guisan, 114). Lastly,demand can also be termed as a better tool to study the market thansupply. It is clearly evident that the demand side of economicscomprises the consumers while the supply side of economics comprisesthe producers and manufacturers. A clear study of these two conceptswill indicate that consumers constitute a large number than theproducers and manufacturers. Therefore, in the study of the markettrends and structure, demand will offer a deeper and morerepresentative view than supply. In conclusion, it is clear that bothsupply and demand are critical in an economy, but demand plays asignificant role and controls demand and hence the market.
Guisan,Seijas M. C. Macro-econometricModels: The Role of Demand and Supply.Hyderabad, India: ICFAI University Press, 2005. Print.