What Is The Relationship Between Supply And Demand As A Subject?

Relationship between supply and demand:
If the supply is less, the demand will be high. Likewise if the supply is more, the demand  and cost will be less.

The concept of supply and demand is one of the most fundamental and important concepts of economics. It is an economic model based on the price and availability of a product in a market. Theoretically, the model suggests that in a perfectly competitive environment, price will function to maintain equilibrium with the quantity demanded by consumers and the quantity supplied by producers.

In order to understand thing better, it is essential to know what supply and demand means. Supply is the quantified measure of a product or service that is made available in the market by sellers whereas demand is the quantified measure of a product or service that is required by buyers in the market. The relationship between supply and demand has a great deal of influence on the price of goods and services.

The law of demand states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.
The law of supply states that, all other factors being equal, the higher the price of a service or good, the more it will be supplied. As people expect more profits from a product, they naturally produce more of that product.

However, there is a lot of disparity between theory and real life. There are a lot of shift factors which might influence the laws of supply and demand. Such shift factors include the income of people, general market sentiment, and ever-changing preference of some goods over the others etc… This can be suitably explained by the dynamic law of supply and demand which states the following:

• If quantity demanded is greater than quantity supplied (excess demand), prices tend to rise; if quantity supplied is greater than quantity demanded (excess supply), prices tend to fall.
• The larger the difference between quantity demanded and quantity supplied, the greater the pressure for prices to rise (if there is excess demand) or fall (if there is excess supply.
• When quantity demanded equals quantity supplied, prices have no tendency to change.

These theories can be considered more suitable when discussing real life economy. When there's an excess of supply and lesser demand, then suppliers have to reduce prices until people want to buy all their extra stuff. The suppliers are desperate to sell all excess products. However, when there's great demand and no supply (there's scarcity), people are willing to pay any price as long as they get the desperately needed, but rare, product. Thus, the market for any product tends to push its price towards equilibrium. Of course, perfect equilibrium is never reached as the supply and demand curves are constantly shifting. The market adjustment is always going on.

The relationship between demand and supply is that when demand is high, supply is low