Demand

Demand means the quantity of a good or service that consumers are willing to purchase at a defined price in a market . It can be interpreted as demand , but not necessarily as consumption, since it is possible to want and not consume a good or service, for several reasons.

The amount of a good that buyers are willing and able to buy is called the quantity demanded, and it depends on several variables that influence the consumer’s choice to buy a good or service or not, such as price, price of other substitute goods, income of the consumer and the taste or preference of the individual.

It is the desire or need supported by the ability and intention to purchase, and it only occurs if a consumer has a want or need and has the financial conditions to meet this need or desire.

The qualitative aspect of demand for consumer goods depends on the social environment and is affected by advertising, while the quantitative aspect depends more on consumers’ income levels.

It always influences supply, that is, demand determines supply movement. It can often be seasonal, that is, it increases or decreases according to the season, the moment of the economy, the income of the population, etc.

The law of demand states that under normal conditions in a market, the quantity demanded is inversely proportional to the price of the good in question. That is, if a product has a low price, it will probably have a high demand.

What are the main factors affecting demand?

There are several factors that affect it, including:

• Income: the higher the income of consumers, the greater their ability to purchase goods and services. This could lead to increased it for luxury goods and premium services, while demand for basic consumer goods could decline.
• Prices of Related Goods: It is for a good can be affected by the prices of related goods, such as substitutes or complements. For example, if the price of a substitute good increases, it for the original good may increase.
• Consumer preferences: Consumer preferences can change over time, affecting demand for different products. For example, demand for electric cars could increase as more consumers become more concerned about environmental sustainability.
• Demographics: Demographic factors such as age and gender can affect demand for different products and services. For example, demand for products and services for seniors can increase as the population ages.

Types of demand

• Negative: when the good in question does not please potential consumers, who may even reject the good or product. This often happens when a brand or product is involved in some scandal;
• Non-existent: happens when the good is unknown to the consumer or he does not see the usefulness of acquiring the good;

• Latent: occurs when there is a certain need, but although there is a demand, there is no good capable of satisfying it;

• Declining: this is the case of a product that already had a high demand, but for some reason, it is decreasing;

• Irregular: it occurs when a product is seasonal, that is, it is directed to a specific occasion of the year, and therefore it increases at that time;

• Full: is the demand considered ideal by the organization that sells a good, meaning that the predicted sales objectives were achieved;

• Excessive: when the demand for a particular good or product exceeds the company’s response capacity, failing to satisfy everyone;

How can we measure demand?

To begin with, we can measure it across a range of factors that influence consumer choices and purchase decisions. 

These factors include  consumer income ,  credit availability ,  prices of related goods and services ,  consumer preferences , and  demographics . 

Understanding these factors is essential for forecasting future demand and for determining companies’ pricing and production strategies.

The most common measure of demand is the quantity demanded of a good or service in a given period of time. 

For example, if consumers buy 100 units of a good in a month, the quantity demanded of that good is 100 units per month. To measure the quantity demanded of a good or service over a given period, economists use sales data, market research, and other statistical methods.

However, the quantity demanded of a good is not the only important measure of demand. Economists also use other indicators to gauge demand, as well:

• The total revenue generated by sales of a good or service;
• Market or product share;
• And the growth rate of demand over time.

What is the difference between demand and quantity demanded?

One of the main sources of confusion around the concept of demand is the distinction between demand and quantity demanded. Although these terms are often used together, they refer to different concepts.

Demand is the inverse relationship between the price of a good and the quantity demanded. Quantity demanded refers to the specific quantity of a good or service that consumers are willing and able to buy at a given price at a given time.

While factors such as income, prices of related goods, consumer preferences and demographics affect demand, the quantity demanded is influenced only by the price of the good or service in question.

For example, consumers’ disposable income can affect demand for sports cars as well as prices for alternative cars such as luxury sedans. 

The quantity demanded for sports cars, on the other hand, is directly influenced by the price of the sports car itself. If the price of the sports car goes up, the quantity demanded goes down, while if the price of the sports car goes down, the quantity demanded goes up.