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Glossary

Demand

Demand is the economic principle describing a consumer’s willingness and ability to purchase a good or service at a given price over a specific period of time.

Luca Moschini

— 1 min read

Definition

Demand refers to the desire and ability of consumers to buy goods or services at various prices. It reflects how much of a product consumers are willing to purchase at different price levels.

In general, demand decreases as prices rise and increases as prices fall, assuming other factors remain constant.

How It Works

Demand is influenced by price changes and consumer behavior. When prices decline, more buyers are typically willing to purchase a product, increasing the quantity demanded.

When prices rise, fewer consumers are willing or able to buy, reducing the quantity demanded.

Why the Term Matters

Demand plays a central role in determining market prices and production levels. It helps explain how consumers respond to price changes and how markets allocate goods and services.

Understanding demand is essential for analyzing market behavior across goods, services, and financial markets.

  • Supply
  • Law of Demand
  • Price Elasticity
  • Market Equilibrium
  • Consumer Behavior

FAQs

What does demand mean in economics?
Demand means a consumer’s willingness and ability to purchase goods or services at a specific price.

How does price affect demand?
Price affects demand inversely, meaning higher prices usually reduce demand while lower prices increase demand.

What is the law of demand?
The law of demand states that, all else equal, demand decreases when prices rise and increases when prices fall.

Does demand only apply to consumers?
Demand applies to both consumers and businesses, as both purchase goods and services in markets.

Can demand change without a price change?
Demand can change due to factors like income levels, preferences, or seasonal conditions even if prices stay the same.

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