Supply creates demand as it is the initial process that gives various parties the capability, the will and the motivation to need something. For instance, if a supplier decides to put out a new product to the market, various things will change in that microsystem. The landlord, workers, and creditors will benefit from the creation of the product (The Economist, 2017). In the process, they will get the financial ability to “demand” goods or services that they had no capability of getting before the creation of the supply. In the same vein, the creator of the product would have ignited demand for something else as he would need to exchange the product he/she has created.
The sources that hold the contrary opinion will posit that if there is no demand, a good on supply will not produce any value. This argument will make it feel that demand drives supply (Krugman, 2015). However, the market situation is not disparate but holistic (The Economist, 2017). In this manner, if some group engages in the oversupply of a product, other quarters will be deprived of some resources. Consequently, there will be increased demand in those areas. The resultant feature will be the practical decision of the people who will be affected to seek alternative products. Therefore, their purchasing habits will shift depending on what is being supplied.
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Classical economic theory postulates that the market responds to incentives and issues solve themselves over time. This proposition implies that the market may have a cold reception towards a product when it is first introduced in the market (Roger, 2015). However, with time, and with sufficient marketing, one can convince the market to try out the new feature present in the product or service. Therefore with the Laissez - faire market setting a producer will decide to present the product in various dimensions to grasp the probable consumer’s interest’s thus driving demand.
Supply has certain elements that make it be better placed to create demand. For instance, it is easy for investors to identify gaps in the market that the majority of the masses may not see. When they respond to such areas, the majority the population will crave for such creations thus driving demand. Various instances in history attest to this fact. For example, the invention of the PC, smartphones, and automobiles came at a time when the markets were reasonably contented with the products they were using (The Economist, 2017). However, when they were supplied, most of the masses clamored for them.
Furthermore, supply will determine to what extent the society will need certain items and be in a position to buy them. For instance, the government creates jobs so that the population can get an income to purchase goods (The Economist, 2017). In a case of economic recession when such positions are limited, there will be decreased demand. However, when the government intervenes and opens up factories and explores new opportunities, the people will bounce back and start clamoring for certain items. Therefore, the genesis is usually the creation or supply of a particular variable in the market.
In conclusion, the effects of demand are short-term while supply mostly extends over a more extended period. Therefore, it is easy to persuade the market to change their quickly changing tastes by giving them the power, the motivation, and the willingness to buy. The consumer will respond accordingly depending on what the market situation offers them thus the high demand for something can quickly change if the suppliers provide something different that gives promise of solving the same problem.
References
Krugman, P. (2015, November 3). Demand Creates Its Own Supply. Retrieved February 1, 2019, from https://krugman.blogs.nytimes.com/2015/11/03/demand-creates-its-own-supply/?_r=0
Roger, F. (2015). Demand Creates its Own Supply. Retrieved February 1, 2019, from http://rogerfarmerblog.blogspot.com/2015/10/demand-creates-its-own-supply.html
The Economist, S. (2017, September 20). How supply can create its own demand. Retrieved February 1, 2019, from https://www.economist.com/the-economist-explains/2017/09/20/how-supply-can-create-its-own-demand
