Demand

Demand is a very useful tool in economics and when used in conjunction with supply can be used to predict and analyze market equilibrium.

From the perspective of a producer (a business, firm, seller or supplier), demand represents the potential for sales of your products. Modern companies spend millions of dollars each year analyzing the demand for their goods and take this into account when making business decisions. Companies often try to increase the demand for their products through advertising and promotions. From the perspective of a consumer (an individual, customer, purchaser or buyer), demand represents your desire and ability to consume products or services.

Demand represents the maximum quantity of a particular good that consumers are willing and able to buy during a specified time period. The fundamental character of the concept of demand is the relationship between the price of a good and the maximum quantity that is demanded and is described by the Law of Demand.

The The Law of Demand states that as the price of a good increases the quantity demanded decreases. And opposite is also true, as the price of a good decreases the quantity demanded increases.This makes sense intuitively since people would like to buy more of a good that costs less.

There are a variety of factors that influence demand for a good and there are several ways that demand can be represented.

There are a number of factors that affect demand and several ways to represent demand.

Factors Affecting Demand

• Price of the Product
• The Consumer's Income
• The Prices of related Goods
• The Tastes and Preferences of the Consumer
• The Consumer's Expectations
• The Number of Consumer's in the Market

How Demand is Represented

• Using Words
• Using a Table
• Using a Graph
• Using an Equation