Do Demand Creates Supply or Vice Versa?

In: Business and Management

Submitted By kasumi14
Words 397
Pages 2
Whether demand creates its own supply or supply creates its own demands, they can be both ways depending on the situations. For example, in the case of supply creates its own demands happens when the objects supplied are technological, intangible and natural resources products. To elaborate more, for technological products, usually consumer first sees what the products are about before deciding to buy it or not. Example is with iPad, at first consumer doesn’t know about the existence of iPad, or any similar technology. But when iPad was first launched, consumers become interested with its features and then decide to buy it or not. It’s the same with intangible products such as fashion, because people see the fashion first before purchasing it. As for natural resources, natural resources exist first before people started to perceive the benefit that can be extracted from them. This was also explained by James Mill’s theory, in which ‘'Production ... creates a market for the commodities produced…the means to pay for an increased flow of goods is provided by those additional goods themselves. Therefore the power to purchase is always available and is constituted by the very goods which have been brought to market….which are demanded by the sellers[1].
In the case of demand creates its supply, it can practically happen when for things related to people’s basic needs. For examples, food and transportations. Because there’s an indefinite demands for food as it’s a basic needs of human.
But there’re also situations where people manipulate the conditions so that what’s naturally supposed to be ‘demand creates its supply’ becomes ‘supply creates its demand’. This was illustrated with the Afghanistan protection business – because one of the mafias’ main business are providing protection to citizens, they intentionally creates criminality and chaos to force people to pay for…...

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