IntroductionThe word “demand” refers to what you want. Of course, you can’t always get what you want. However, you can probably lay out at least a general description of what you want and perhaps then be ready to make decisions about which goals to aim for first depending on what resources or constraints you face. Economists describe what you want as your demand. Show It is very helpful, though difficult at first, to practice sorting out what you demand from what you can accomplish or what constrains you. When you say to your roommate, “Let’s go to McDonald’s for a Big Mac,” you have probably already decided that you both might want to go to McDonald’s and also can afford McDonald’s. However, from an economist’s perspective, that decision involved two separate steps. First, you have a personal set of wants, rankings, indifferences–desires you’d have even if you didn’t have a roommate to work things out with or a budget constraint given to you by your parents or job. Your personal desires might have included everything from a Big Mac to a steak to eating a gallon of ice cream. Economists call that general set of desires your demand for food. The separate part where you pick among those options depending on satisfying your budget or your deference to your pals or your aims to lose weight are your constraints. Your constraints are different from your demand. If you first figure out what you demand and then separately figure out the constraints, you will find the key to solving many of your own problems as well as to understanding much of economics in general. Economists also distinguish between your demand–sometimes called a demand function or demand curve–and the quantity you demand. Your demand is a description–a list or set of personal rankings–of what you’d do or buy in every possible circumstance you can imagine, feasible or not. If you get to McDonald’s and find that the price of Big Macs has risen to $20/burger, you may decide you prefer to go to 5 Guys for a burger. In casual language, you’d likely say the Big Mac is not worth the price. Economists say that the quantity you demanded at a price of $20/burger was zero. But at $3/burger, the quantity you might have demanded was perhaps 2 Big Macs. A demand curve is an entire list of all the quantities you’d demand at each possible price you can imagine. Another term to distinguish is what economists call Aggregate Demand. Aggregate demand sounds like it should refer to the sum of everyone’s demands. However, aggregate demand is a very different concept from an ordinary demand curve. You can sum up people’s individual demands for particular clearly-defined products into demand curves. However, adding up all those demand curves for different goods across a whole economy’s worth of products–apples, oranges, airplanes, defense, computers, parklands, house-cleaning services, government services, medical care, etc.–turns out to be trickier. Aggregate demand is considered to be part of macroeconomics. Definitions and BasicsDemand, from the Concise Encyclopedia of Economics
Microeconomics, from the Concise Encyclopedia of Economics
What Is Subjective Value?, a LearnLiberty video.
In the News and ExamplesCole on the Market for New Cars, podcast episode on EconTalk, June 9, 2008.
Marginalism, from the Concise Encyclopedia of Economics
A Little History: Primary Sources and ReferencesIndifference curves, diminishing
marginal utility, and the demand curve:
Advanced ResourcesElasticity and Its Expansion, by Morgan Rose.
Related TopicsElasticity of Demand What shows the quantities of products demanded at each price?A demand schedule is a table that shows the quantity demanded at each price. A demand curve is a graph that shows the quantity demanded at each price. Sometimes the demand curve is also called a demand schedule because it is a graphical representation of the demand scheduls.
Is the amount of a product that is offered for sale at all possible prices in the market?Supply is the amount of a product offered for sale at all possible prices in a market. The Law of Supply states that more product will be offered for sale at higher prices than at lower prices.
What is the price at which the quantity of goods demanded and the quantity of goods supplied are equal?equilibrium price
the price in a market at which the quantity demanded and the quantity supplied of a good are equal to one another; this is also called the “market clearing price.”
What do you mean by quantity demanded?Definition: Quantity demanded is the quantity of a commodity that people are willing to buy at a particular price at a particular point of time.
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