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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 periodicals archive ?
On the demand side, China's robust manufacturing sector is cited as a leading cause of the new red metals resurgence.
In an attempt to better control the demand planning process, most organizations develop in parallel a bottom-up plan based on weekly sales forecasts, taking inputs from sales and field representatives.
An adaptive supply chain operation dynamically matches demand and supply, helps maximize revenue, and targets customers to boost revenue.
In 1999, growing supply was dragging demand upward and the Fed was imagining "excess demand" In 2001, plunging supply was pulling demand down and the Fed was imagining "excess supply.
Latex natural rubber demand will remain flat in 1995, with demand predicted to reach 73,000 metric tons.
Electricity market trends detailing each country's power production and end user demand by fuel input.
Put differently, growth of demand for semiconductors today is running at 40 percent for the next two years, and this is expected to double in the next three to four years.
Procter & Gamble signed a global license for Terra's demand sensing software in October 2006.
EnerNOC was recognized as the sole award recipient in the Pricing and Demand Response category for its One Click Curtailment[TM] technology, which enables remote, automated demand response.
Between 2000 and 2006, the demand for electricity in Connecticut increased by nearly 30 percent, from 5,875 MW to 7,479 MW.
According to the National Electric Reliability Council's (NERC) recently released 2006 Long-Term Reliability Assessment, demand response is a critical component in maintaining the reliable electric delivery for a region.