3.1.2—Demand and supply

Demand is the quantity buyers are willing and able to purchase at a given price and time. Supply is the quantity sellers are willing and able to offer. Price and non-price factors shift the relationship.

A change in price usually moves along a curve; a change in income, tastes, costs, technology or expectations can shift demand or supply. Business decisions should identify which mechanism changed.

A health campaign may reduce demand for sugary drinks at each price, while a cheaper ingredient can increase supply at each price.

A fall in sales does not by itself prove demand fell; price, availability and competitors may have changed.