Demand

Demand is an economic concept referring to the quantity of a good or service that consumers are willing and able to purchase at a given price over a specific period of time. It represents consumer desire backed by purchasing power and is a fundamental driver of market activity. Demand is typically illustrated through a demand curve, which shows an inverse relationship between price and quantity demanded, indicating that higher prices generally lead to lower demand, and vice versa.

Several factors influence demand aside from price. These include consumer income levels, preferences and tastes, prices of related goods (substitutes and complements), population demographics, and expectations about future prices or availability. Changes in any of these factors can shift the demand curve either to the right (increase in demand) or to the left (decrease in demand).

Demand is distinct from the concept of "effective demand," which emphasizes not just desire but also the ability to pay. It is also different from "quantity demanded," which refers to a specific amount consumers are willing to buy at a particular price. Movements along the demand curve reflect changes in price, while shifts of the curve indicate changes in other demand determinants.

Understanding demand helps businesses and policymakers make informed decisions related to pricing, production, and resource allocation. It is a key component in the analysis of market equilibrium, where supply and demand intersect to determine prevailing prices and quantities in a market system.

References:

- Mankiw, N. G. (2020). Principles of Economics.

- Samuelson, P. A., & Nordhaus, W. D. (2010). Economics.