Demand
Allocation of Resources · 4 question types
What Demand Is
Demand is the quantity of a good or service that consumers are willing and able to buy at a given price over a given time period.
Two words in the definition carry all the marks.
- Willing. The consumer actually wants the product. Wanting is a necessary part of demand.
- Able. The consumer has the purchasing power to pay. Wanting a product without being able to afford it is not demand.
Demand backed by the ability to pay is sometimes called . A child who wishes she had a £400 phone but cannot pay £400 is not part of the demand for that phone. A wish without purchasing power does not count.
A definition that just says "what people want" or "how much consumers would like to buy" loses the second mark. Both willing and able must appear.
Demand is always measured over a time period (per day, per month, per year) and at a specific price (or across a range of prices). A statement like "demand for coffee is 5,000 cups" is incomplete; "demand for coffee is 5,000 cups per week at £3 per cup" is the correct form.
Define demand
Defining demand is a standard 2-marker, so you need to know it is the quantity consumers are willing AND able to buy at a given price. Both words are needed — "what consumers want to buy" alone scores one mark; a wish without the purchasing power to pay is not demand.