What is demand for a good?

In economics, demand is the desire to own anything, the ability to pay for it, and the willingness to pay .The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time.

What Does Law Of Demand Mean? A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.

Demand schedule A demand schedule is a table that lists the quantity of a good a person will buy at each different price. The demand curve is a graphical depiction of the relationship between the price of a good and the quantity of the good that a consumer would demand under certain time, place and circumstances. For example:

Quantity demanded of wheat (in kilograms) 15 10 5

Price of wheat (in kilograms) 10 15 20

Demand curve The demand curve is the graph depicting the relationship between the price of a certain commodity, and the amount of it that consumers are willing and able to purchase at that given price. It is a graphic representation of a demand schedule.

As law of demand states that as price of a good increases, quantity demanded of that good decreases and vice versa (ceterus Peribus).Because of this the shape of demand curve is downward sloping showing an inverse relation between price and quantity demanded of the good.

Other Factors affecting demand Change in peoples income: More the people earn the more they will spend and thus the demand will rise. A fall in income will see a fall in demand. Changes in population: An increase in population will result in a rise in demand and vice versa. Change in fashion and taste: Commodities or which the fashion is out are less in demand as compared to commodities which are in fashion. In the same way, change in taste of people affects the demand of a commodity. Changes in Income Tax: An increase in income tax will see a fall in demand as people will have less money left in their pockets to spend whereas a decrease in income tax will result in increase of demand for products and services because people now have more. Change in prices of Substitute goods: Substitute goods or services are those which can replace the want of another good or service. For example margarine is a substitute for butter. Thus a rise in butter prices will see a rise in demand for margarine and vice versa.

Change in price of Complementary goods: Complementary goods or services are demanded along with other goods and services or jointly demanded with other goods or services. Demand for cars is affected the change in price of petrol. Same way, demand for DVD players will rise if the prices of DVDs fall. Advertising: A successful advertising campaign may affect the demand for a product or service.

Price elasticity of demand Price elasticity of demand (PED or Ed) is a measure used to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income). The formula for the coefficient of price elasticity of demand for a good is :

Elasticities of demand are interpreted as follows : Value Descriptive Terms Ed = 0 Perfectly inelastic demand - 1 < Ed < 0 Inelastic or relatively inelastic demand Ed = - 1 Unit elastic, unit elasticity, unitary elasticity, or unitarily elastic demand - < Ed < - 1 Elastic or relatively elastic demand Ed = - Perfectly elastic demand

What is demand analysis? Demand analysis is the Study of sales generated by a good or service to determine
the reasons for its success or failure, and how its sales performance can be improved .

It is done to determine how much demand there is for your product at what price. To Determine if there are alternatives or not.