Demand: Definition, Meaning, Law

DEMAND

Definition of demand

The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price.

The demand curve is usually downward sloping, since consumers will want to buy more as price decreases. Demand for a good or service is determined by many different factors other than price, such as the price of substitute goods and complementary goods. In extreme cases, demand may be completely unrelated to price, or nearly infinite at a given price.

Along with supply, demand is one of the two key determinants of the market price.

Meaning of Demand

Demand:The term 'demand' is defined as the desire for a commodity which is backed by willingness to buy and ability to pay for it.

The Law of Demand

The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good.

In other words, the higher the price, the lower the quantity demanded. The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of buying that good.

As a result, people will naturally avoid buying a product that will force them to forgo the consumption of something else they value more. The chart below shows that the curve is a downward slope.