# Definition of Demand and Supply Curves

Demand and supply curves are important things you need to know when studying or observing markets in the business world.

You must be familiar when you know the price of goods will rise significantly at certain moments. Price increases can also occur when an item becomes in high demand. This is already common in business, commonly known as supply and demand.

The higher the demand, the higher the price of goods will be. On the other hand, if an item is not in demand, its price will decrease. These two aspects can be described in the demand and supply curves.

## Understanding the Supply and Demand Curve

If you observe more closely, a business is very closely related to the science of calculation. Put, as a business owner, you will, of course, do target or market research about how many opportunities you can get concerning the interests of potential customers.

The easiest way to do market research is to see how competitors’ businesses progress for the same product. It’s easy; just look at the demand and supply of products. If customers are increasingly interested in the product, you will easily find many other similar products at varying prices.

To make it easier for you to observe various aspects that affect the rise or fall of a product in the market, usually, a demand and supply curve is needed. The demand curve is used to determine the ratio between the price of the product and the amount of production.

Two different analogies can describe the demand curve. First, high demand results in increased sales but not followed by quality, so prices will decrease. Second, the increased demand so that the price accompanies sales increase and rate.

Meanwhile, the supply curve compares the price of the product and the amount of production. So, when you find the high cost of a product, indeed the offer will also increase. Usually, this occurs due to rising prices due to high demand and rising product prices.

Read: Explanation of Production Costs and How to Calculate Production Costs

For example, a pizza pan with a price of Rp. 50 thousand can sell as many as 100 pans. This will continue to increase in the curve; if the selling price increases by Rp. 70 thousand, the pizza can be sold as many as 150 pans. However, supply can also increase if the costs charged for production are high and decrease if the production costs are low.

So, supply and demand curves are essential things that you need to know when studying or observing markets in the business world. This will be one of the considerations that you can use in making strategies and making business decisions.

## Factors Influencing Demand Curve

Apparently, in its application in the business world, several factors also influence supply and demand. The following factors usually cause the high demand itself:

One’s income will play a vital role in the strategy of using money. The higher the income, the higher the purchasing power of certain goods.

Well, this high purchasing power will increase the demand for these products.

### 2. Goods Quality

The better the quality of products and services offered by producers, the higher the price. Loyal consumers with quality products will certainly pay whatever price is offered.

### 3. Increase in Prices of Other Items

Not only quality, increasing demand for a product also occurs due to an increase in the price of substitute or substitute goods. For example, during Eid al-Adha, the price of goats and cows will rise. Both have the same function but different types.

## Factors Influencing Supply Curve

Meanwhile, several factors that play a role in bidding include:

### 1. The Business Owner’s Desire to Provide Goods

This factor is influenced by a market interest in purchasing goods, the amount of taxes to be paid, and developments that may occur to these goods in the future.

### 2. Product Available or Not

This is determined by how quickly the product can be made by the manufacturer, the level of efficiency when the product is made, and the presence or absence of human and natural resources to support the product’s manufacture.

### 3. Manufacturers’ Capability to Market Products

Aspects that play a role in this factor include product legality, copyright, and logistical needs in the product sales process (usually related to the distribution process).

## Product Stock is the Key

Based on the explanation of the supply and demand curves, the amount of stock of goods or products turns out to be one of the determinants of business success. This is why you need to manage the supply of goods in the right way.

The reason is, without management, in this case including regular monitoring, the stock of goods can be damaged or no longer suitable for use. This, of course, will result in a decrease in the number of stores that impact demand and supply.