Supply refers to the quantity of a product or service that producers can provide in the market. Demand, on the other hand, represents the quantity of that product or service that consumers want to buy. The interplay between supply and demand sets the price and accessibility of goods and services within an economy.
Example:
Since before 2020, there has been a global shortage of semiconductors. These are important parts useful in creating phones, cars, and medical devices. The shortage was due to the supply and demand mismatch, which resulted from factors like increased demand for semiconductors in various industries, difficulties in getting the required materials, and unexpected events like factory fires and the COVID-19 pandemic. To address this shortage, the private sector is working to increase production, manage supply chains more effectively, and design products that use semiconductors efficiently.
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