Question

How do you distinguish between the concepts of the D and S functions in microeconomics and the concepts of AD and AS functions in macroeconomics? Why they are different?

Answer 1

Demand is the desire of a buyer for a particular commodity at a specific price. Supply is the quantity of a commodity that producers are willing to give to consumers at a certain price.

But in macroeconomics AD and AS is a curve that represents the aggregates demand and supply of any commodity.

In case of demand there is an inverse relationship between the price of that commodity and demand but in case of supply when price increases it will increase supply.

In AD curve it is drawn in the IS-LM model at different potential price and AS curve reflects the labor market and also draw in the IS-LM model.

Demand depends on consumer choice their supply depends on firms choice.

But the AD curve shows the combinations of the price level and output at that point goods and assets markets are simultaneously in equilibrium. AS for controls the labor market.