The quantity demanded of a goods or services is the amount that consumers plan to buy in a given period of time at a particular price.Demands are different from wants.
Wants are the unlimited desires or wishes that people have for goods and services.Security guarantees that many perhaps most of our wants will never be satisfied.Demand reflects a decision about which wants to satisfy.If you demand something then you have made a plan to buy it.
The quantity demanded is not necessarily the same amount as the quantity actually bought sometimes the quantity demanded is greater than the amount of goods available.So the quantity bought is less than the amount of goods available so the quantity bought is less than the quantity demanded.
The quantity demanded is measured as a an amount per unit of time.For example suppose a person consumes one cup of coffee a day.The quantity of coffee demanded by that person can be expressed as 1 cups per day or 7 cups per week or 365 cups per year without a time dimension, we can not tell whether a particular quantity demanded is large or small.
The law of Demand
Other things remaining the same,the higher the price of goods the lower is the quantity demanded.
Why does a higher price reduce the quantity demanded?The key to the answer lies in other things remaining the same.Because other things are being held constant, when the price of a good rises.It rises relative to the prices of all other goods. Although each good is unique. It has substitutes other goods that serve almost as well as the price of a good climbs higher, relative to the prices of its substitutes, people buy less that good and more of its substitutes.
Demand schedule and demand curve
A demand schedule lists the quantities demanded at each different price, when all other influences an consumers planned purchase such as the prices of related goods of incomes expected future prices, population,and preference remain the same.
The point on the demanded curve labeled a through represent the row of the demand schedul.
Willingness to pay
Another way of looking at the demand curve is as a willingness to pay curve.It tells us the higher price.that will be paid for the last unit available.If a large quantity is available, that price is low.If a small quantity is available that price is high
A change in demand
The term demand refers to the entire relationship between the quantity demanded by both the demand schedule and the demand curve.
1)Price of related goods-The quantity of tapes that consumer plan to buy does not depend only on the price of types.It also depends in part on the prices of related goods fall in to two categories substitute and complement.
A complement is a good used in conjunction with another good.Some example of complements are hamburger and French fries pastry snack and drink spaghetti and meat sauce running shoes and jogging paints.
2)Income -Another influence on demand is consumer income other things remaining the same when income increases decreases they buy less of most goods.It does consume with lower incomes demand less of most of goods rich people consume more food,clothing housing art,vacations and entertainment them do poor people.
Although an increase in income leads to an increase in the demand for most goods.It does not lead to an increase in the demand as income increase are called normal goods.
Goods that decrease in demand when income increase are called inferior goods.Eg of inferior goods are rice and potatoes.These two goods are a major part of the diet of people with very low income.Its income increase,the demand for these goods decline as major expensive meat and dairy products are substituted for them.
3)Expected future price-If the price of good is expected to rise,it make sense to buy more of the good today and less in the future when its price is higher.Similarly if its price is expected to fall.It pays to cut back on today’s purchase and buy more later when the price is expected to be lower.Thus the higher the expected future price of a good, the larger is today’s demand for the good.
4)Population-Demand also depends on the size of the population,the size of two population,the greater is the demand for all goods and services and the smaller the population, the smaller is the demand for all goods and services.
5)Preference-Finally demand depends on preference.Peeference are an individual attitudes towards goods and services for example a rock music fanatic has much greater than does a tone deaf workaholic
Preference are not observed. But preferences change.Slowly and so have little influence a change in demand.