demand

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Demand

The need or desire for a good, service, or asset among consumers at a given price. The amount of demand at a given price is determined by supply and the availability of similar or replacements goods and services, among other factors. While demand for some staple products is relatively constant regardless of price, most of the time the price has a large influence on the level of demand. Demand for a good or service tends to increase as its price decreases. See also: Law of supply and demand, Demand curve.

demand

the amount of a product which is purchased at a particular price at a particular point in time. A demand curve is a line showing the relationship between the price of a product and the quantity demanded per time period over a range of possible prices. Demand curves are usually downward sloping, indicating that as the price of the product falls, more is demanded. The extent to which the demand for a product will increase as price falls (and the extent to which demand will drop if the price rises) depends on the product's price-ELASTICITY OF DEMAND. The demand for a product, however, is determined also by a variety of non-price factors. A demand function attempts to incorporate all the factors that have a statistically. significant influence on demand for example, consumers' incomes, the prices of substitute products, advertising, etc. Demand curves will shift if any of these factors change over time.

In practice, firms are unable to derive definitive demand curves because of incomplete information. For this reason many firms use a COST-BASED PRICING formula for determining prices, but allow for the influence of demand by varying the profit mark-up (see DEMAND-BASED PRICING, COMPETITION-BASED PRICING).

There are various methods a firm can use to ‘forecast’ demand, including time series analysis, barometric indicators and econometric models. See SALES FORECASTING.

demand

or

effective demand

the WANT, need or desire for a product backed by the money to purchase it. In economic analysis, demand is always based on ‘willingness and ability to pay’ for a product, not merely want or need for the product. CONSUMERS’ total demand for a product is reflected in the DEMAND CURVE. Compare SUPPLY.
References in periodicals archive ?
On the other hand, the Commissioners appeared clear on instances where they did not recognize a provision as containing a legally demandable right.
As the term to maturity goes to zero, such a contract becomes a demandable debt that gives the customer the legal right to reclaim (and transfer, if it is a checking account) any part of the deposited sum on any date, but that also allows the bank to continue using the sum until the date the depositor actually reclaims it.
Diamond and I also explain why we would not see industrial firms financing themselves with demandable deposits.
As these intermediaries do not tie demandable liabilities to nonmarketable assets, there appears to be little threat of panic to MMMFs from commercial paper defaults or to nonbank lenders from the failure of some of their number.
Issuance of demandable or short-maturity debt helps to ameliorate the conflicts between bank debtholders (including depositors) and equityholders (or bank management) resulting from leverage, adverse selection, and moral hazard.
Relative to direct lending (that is, savers lending directly to borrowers), banks issue safe, demandable deposits, thus removing the need for savers to monitor the risk-taking behavior of these institutions.
In other words, the check represents a demandable debt.
This in turn decreases bank net worth, since a bank's loans, which pay off only in the long run, fall in value as the real interest rate rises, but the bank's liabilities of demandable deposits do not have a corresponding fall in value.
Second, the fact that banks finance through large quantities of demandable debt allows nervous depositors to withdraw from the bank rather than wait to see whether their bank will survive or fail.