The supply curve and the demand curve are fundamental concepts in economics that illustrate the relationship between the quantity of a good that producers are willing to sell or consumers are willing to buy, and its price.
The demand curve shows the relationship between the price of a good and the quantity that consumers are willing to purchase at that price. Typically, it slopes downward from left to right, indicating that as prices decrease, consumers are willing to buy more of the product. This is due to the law of demand, which states that there is an inverse relationship between price and quantity demanded.
On the other hand, the supply curve illustrates the relationship between the price of a good and the quantity that producers are willing to sell. This curve usually slopes upward from left to right, showing that as prices increase, producers are willing and able to supply more of the good. This is based on the law of supply, which states that there is a direct relationship between price and quantity supplied.
In summary, the key difference lies in their orientation: the demand curve reflects consumer behavior and the impact of price on purchasing, while the supply curve represents producer behavior and the impact of price on production. Both curves are essential for understanding how markets operate and the determination of equilibrium prices.