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DEFINITION:
Demand is an expression of a consumer’s desire and means to purchase a product or service.
Understanding demand
Demand describes a consumer’s willingness and ability to purchase a good or service. Economists often refer to demand in two ways: market demand is the measure of the desire of all consumers in an economy to buy a particular product or service – such as a new computer or a pedicure. Aggregate demand is the economy’s combined demand for all products and services at a given point in time. Aggregate demand can give economists an overall view of the level of consumer activity in a country.
EXAMPLE
When the imaginary restaurant Bluto’s Fried Chicken launched its first spicy sandwich, it immediately went viral on social media. Soon, lines formed out the door to buy the sandwich. Bluto’s didn’t have enough ingredients or staff to meet the sudden demand, and the restaurant ran out of sandwiches within days.
Takeaway
Demand is like your favourite cereal sold out at the supermarket..
You eat your favourite cereal every morning because you think it tastes the best. Other people seem to agree with you because when you go to the store, everything is sold out. There’s a big demand for that cereal. You could buy another cereal that is well on sale, but you do not like the taste of this one. The demand for this cereal is low.