Supply and Demand Law

The Law of Supply and Demand (Demand) seeks to stabilize the demand and supply of a particular good or service. Supply is the quantity of the product available in the market, while demand is the existing interest in relation to it. The offer depends on the price, quantity, technology used in manufacturing, among other things related to products and services. Demand is influenced by the end consumer's preference, the compatibility between price and quality and the ease of purchasing the product.
The determining factor for the demand for a particular good or service is no longer the price, as it undergoes changes due to any imbalance between supply and demand. Thus, it can be said that the price of something is determined by the consumer, because when they start looking for any other product, the producer raises its price, making the consumer pay more if they want to buy the same. On the other hand, when a product is no longer in demand, the producer is encouraged to stop producing it so that he does not have expenses in relation to the supply without demand.


The price of a good or service is fixed taking into account the relationship between demand and the need of the final consumer, and also the costs generated in the manufacture and the time spent in its production. The factors that influence the end consumer to look for a particular product are the needs in the same, purchasing power, competition, quality, customer satisfaction, among others.

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By Gabriela Cabral
Brazil School Team

Would you like to reference this text in a school or academic work? Look:

SCHOOL, Team Brazil. "Law of Supply and Demand"; Brazil School. Available in: https://brasilescola.uol.com.br/economia/lei-da-oferta-e-procura.htm. Accessed on June 27, 2021.

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