Demand (Economics) - Explained
What is Demand?
Written by J. Mance Gordon
Updated at April 23rd, 2024
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What is Demand?
Demand, in economics, is a measure of the extent to which a consumer desires and willingness to purchase a given product or service at a pre-defined time or period.
To constitute demand in the market, a consumer must have both the desire or need and ability to purchase a good or service. The ability to purchase is generally determined by the consumer's disposable income budget.
What Factors Affect the Demand for a Product?
We defined demand as the amount of some product a consumer is willing and able to purchase at each price. That suggests at least two factors in addition to price that affect demand.
Willingness to purchase suggests a desire, based on what economists call tastes and preferences. If you neither need nor want something, you will not buy it.
Ability to purchase suggests that income is important. Prices of related goods can affect demand also.
Related Topics
- Self Interest
- Cost-Benefit Analysis
- Enlightened Self-Interest
- Fisher's Separation Theorem
- Ratchet Effect
- Total Utility (Economics)
- Efficiency Principle
- Expected Utility
- Subjective Theory of Value
- Positional Goods
- Utilitarianism
- Indifference Curve
- Time Preference Theory of Interest
- Incentives
- Marginal Benefit
- Diminishing Marginal Utility
- Sunk Costs
- Production Possibilities Frontier
- Law of Diminishing Returns
- Economic Efficiency
- Efficiency Theory
- Productive Efficiency
- Capacity Utilization Rate
- Allocative Efficiency
- Pareto Efficient
- Comparative Advantage
- Criticisms of the Economic Approach
- Behavioral Economics
- Normative Economics
- Positive Economics
- Invisible Hand
- Sunk cost