Demand

AAA

DEFINITION of 'Demand'

An economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service. Holding all other factors constant, the price of a good or service increases as its demand increases and vice versa.

INVESTOPEDIA EXPLAINS 'Demand'

Think of demand as your willingness to go out and buy a certain product. For example, market demand is the total of what everybody in the market wants.

Businesses often spend a considerable amount of money in order to determine the amount of demand that the public has for its products and services. Incorrect estimations will either result in money left on the table if it's underestimated or losses if it's overestimated.

VIDEO

Loading the player...
RELATED TERMS
  1. Theory Of Price

    An economic theory that contends that the price for any specific ...
  2. Supply Shock

    An unexpected event that changes the supply of a product or commodity, ...
  3. Substitute

    A product or service that satisfies the need of a consumer that ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given ...
  5. Demand Shock

    A sudden surprise event that temporarily increases or decreases ...
  6. Supply

    A fundamental economic concept that describes the total amount ...
RELATED FAQS
  1. How important are fleet sales to an automaker's business?

    Fleet sales have been turning much more profitable with the recovery of the auto industry since the financial crisis of 2 ... Read Full Answer >>
  2. What's the difference between the substitution effect and price effect?

    The substitution effect is caused solely by the change in price of a consumer item. The price effect relates directly to ... Read Full Answer >>
  3. Why should an investor include the airlines sector in his or her portfolio?

    The global airline sector is expected to benefit from robust growth as airlines continue to attract more passengers. Demand ... Read Full Answer >>
  4. How can small businesses manufacture demand?

    Small businesses can manufacture demand by both looking at the market for their product and service and by looking for ways ... Read Full Answer >>
  5. Is demand or supply more important to the economy?

    Supply and demand are both key to economic activity. The two influence each other and impact prices of consumer goods and ... Read Full Answer >>
  6. How does the law of supply and demand affect prices?

    The law of supply and demand is an economic theory that explains how supply and demand are related to each other and how ... Read Full Answer >>
  7. What are tradable commodities?

    Tradable commodities consist of basic goods used in commerce that are often interchangeable with other goods of the same ... Read Full Answer >>
  8. What is the difference between price inelasticity and inelasticity of demand?

    These two measurements are interrelated, and are used in conjunction to understand market production and purchasing. Price ... Read Full Answer >>
  9. What causes oil prices to fluctuate?

    Oil is a commodity, and as such, it tends to see larger fluctuations in price than more stable investments such as stocks ... Read Full Answer >>
  10. What causes a significant move in the stock market?

    There is a nearly infinite number of factors that can cause the stock market to move significantly in one direction or another. ... Read Full Answer >>
Related Articles
  1. Economics

    What is Demand?

    Demand is the economic term for the cumulative wants and desires of consumers as they relate to a particular good or service. Generally speaking, if all other factors remain constant, as demand ...
  2. Active Trading

    Why You Can't Influence Gas Prices

    Don't believe the water-cooler talk. Big oil companies aren't to blame for high prices.
  3. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  4. Home & Auto

    Top 4 Things That Determine A Home's Value

    Your house depreciates over time, while the land beneath it is likely to do the opposite.
  5. Entrepreneurship

    The Giants Of Finance: Andrew Carnegie

    Though not as well-remembered as some of his contemporaries, Andrew Carnegie's legacy is strong and moralistic.
  6. Personal Finance

    Microeconomics

    This tutorial teaches the basics of one of the most important economic topics. A must for all investors.
  7. Retirement

    Economic Indicators To Know

    The economy has a large impact on the market. Learn how to interpret the most important reports.
  8. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  9. Economics

    What is a Management Buyout?

    A management buyout, or MBO, is a transaction where a company's management team purchases the assets and operations of the business they manage.
  10. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center