What is Demand in Economics
Demand in Economics
Demand in economics is referred to the number of goods or services individuals are eager or interested in as well as able to purchase at the specific price of each. Needs and wants are being based on demand. An individual consumer may be deviate between need and want, but from an economist’s point of view, they are the same. Whereas demand is also based on the ability to pay something and if you are not able to pay something, it means you do not have demand for something.
Price is when a buyer pays for something specific good or service. The total number of units or items purchased at that price is called quantity demand. Whenever the price of goods and services rises, the number of goods and services demanded falls. Similarly, a decrease in price will increase the quantity demanded.
For Example, When the price of soybean oil increases, consumers look for ways to reduce their consumption by using the alternative of soybean Oil, such as they may prefer Canola Oil, Coconut Oil, etc. whose prices are low. It is known as an inverse relationship between price and quantity demanded.
Law of Demand
The law of demand assumes that all other variables that affect demand are held constant.
For Example, In the market of Soyabean oil, it can be shown in the table of demand schedule given below, which shows that quantity demanded at each price and price is measured in dollars per Ton of Soyabean oil. The quantity demanded is measured in millions of tons over some time period and over some geographic area such as country or state.
Table. Price and Quantity Demanded of Soyabean Oil
|Price (per Ton)||Quantity Demanded (millions of Tons)|
Factors Affect Demand in Economics
At least three factors affect demand. First is “Willingness to purchase” which suggests a desire to buy, and it depends on what economists call tastes and preferences. If you neither need nor want something, you won’t be willing to buy it. The second is “Ability to purchase” which suggests that income is important. Professors are usually able to have enough money for better housing and transportation than students because they have more income. The third is the “prices” of related goods, which can also affect demand in economics. If you need a new iPhone, for example, the price of an iPhone 11 may affect your demand for Apple’s new iPhone 13. Finally, the size or composition of the population can affect demand.
[…] of demand is a significant variant on the concept of demand. Demand can be categorized as elastic, inelastic […]