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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.


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.



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 classic literature ?
Aye, aye, we're coming," Seth answered from within, and presently appeared stooping under the doorway, being taller than usual by the black head of a sturdy two-year-old nephew, who had caused some delay by demanding to be carried on uncle's shoulder.
The officers may write to the papers demanding the heads of the Horse Guards in default of cleaner redress for grievances; the men may break loose across a country town and seriously startle the publicans; but neither officers nor men have it in their composition to mutiny after the continental manner.
Henri, her real one was no other than a design to impress me with an idea of her own exalted goodness and tender considerateness; so having again hastily nodded assent to her remarks, I obviated their renewal by suddenly demanding the compositions, in a sharp accent, and stepping from the estrade, I proceeded to collect them.
I would decipher a sound which a cockney would represent by zerr, and a Frenchman by seu, and then write demanding with some heat what on earth it meant.