Macro and Micro Economics Microeconomic analysis rests of the concepts of supply and demand for goods and ad services in the market, which later affect the household individuals and other small firms. People typically understand the two words as they get commonly used in everyday conversation but often not in the precise way economists understand the term. Some students often confuse a change as well as a shift in demand as well as a shift in the quantity demanded. Demand can get said as the quantity of goods and services that particular consumers of a given locality are willing and able to buy, at the prevailing price, within a given period.
Supply refers to the amount of goods and services that suppliers find themselves able to export the market, at the current price, within a given time (Estrada, 2008). The demand relates to the buyers while supply purely involves the producers, bringing their produce to the market, manufacturers or general companies. In differentiating the two further, causes and changes in demand get caused by such factors as price, consumer fashion, and tastes. If the price of a good increases, its demand reduces unless it’s a good having abnormal demand curve such as goods of ostentation, inferior and Giffen goods, and vice versa (Estrada, 2008).
For the case of supply, an increase in the price of a product may trigger an increase in its supply. When the price goes up, producers, among other suppliers will get willing to supply more since they will realize more revenue, hence profitability in their productions (Lapide, 2013). There is a clear distinction between change or movement in demand and shift in demand.
Changes in demand get caused by non-price factors such as consumer tastes, preference and fashions, demographic patterns, culture among others. On the other hand, change or movement in demand is caused only by price (Lapide, 2013). ReferencesEstrada, M. A. R. (2008). Demand and supply surfaces. Malaysian Journal of Economic Studies, 45(1), 71-77. Retrieved from http: //search. proquest. com/docview/201592759?accountid=45049 Lapide, L. (2013). Supplys demand-shaping roles. The Journal of Business Forecasting, 32(3), 18-21. Retrieved from http: //search. proquest. com/docview/1459714351?accountid=45049