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Supplyand demand why demand is better
Itis evident that supply and demand has been the two main concepts ineconomics that determine the market trends. The two concepts controlthe prices of products and services in the market. However, economicanalysts have argued over which of two concepts is better indetermining how the economy works. It is imperative to note that thedemand side of economics is a better approach in trying to understandhow an economy or a market works than the supply side of economics.The demand side of economics, which affects a majority of thepopulation in an area, determines what amount of a particularcommodity will be produced. A slight drop in demand is an indicationof reduction of the purchasing power from the populace. Noteworthy isthe fact that the suppliers comprise of wealthy producers whose rateof production is determined by the demand. It is also apparent thatthe suppliers are fewer than the people who control demand or theconsumers. Therefore, demand becomes a better tool to analyze amarket economy than supply. The demand side of economics isrepresentative of all members of the society while the supply side ofeconomics only represents the wealthy producers and manufacturers.
Demandis responsible for determining the price in the market. In a casewhere demand is low, suppliers are forced to reduce their prices inorder to sell their commodities. In other words, consumers have thepower, through demand, to influence market trends in terms of prices.It is also apparent that demand is a significant factor indetermining what suppliers will produce and supply. For instance, thedemand of a particular product such as designer clothes in a certaincity will attract suppliers and tailors of such clothes. This meansthat demand precedes supply. A high demand will attract increasedsupply and vice versa.
Itis also critical to point out that the concept of demand can be usedto study the economy. For instance, when the demand of commodities islow, it can be associated with low dispensable income to theconsumers. On the contrary, a high demand of commodities in a countrycan be argued to be an increase in the disposable income. However,supply cannot be used to determine the state of an economy since anincrease in supply must be accompanied by an increase in supply. Itis apparent that demand determines the circulation of money in theeconomy. An increase in demand of commodities indicates that there iscirculation of money in the country. As a consequence, increaseddemand will lead to suppliers making profits, which in turn resultsin the growth of the economy.
Whereasthe concepts of demand and supply are vital for an economy or aparticular market, it is imperative to note that demand plays a hugerole than supply in the control off the market. Supply of goods andservices is solely dependent on the quantity demanded. In otherwords, it can be argued that supply cannot exist without demand. Theconsumers are the custodians of money, which they use to purchaseproducts through the concept of demand. It is needless to state thatmoney is a significant factor in the market and in the economy. It istherefore clear that demand is a better tool for understanding themarket than supply. Demand controls supply, as well as the economy.