The law of demand states, if the price of any good or service increases, the quantity demanded will decrease; and if the price of any good or service decreases, the quantity demanded will increase.
Clearly, this law shows a dependable relation between demand and quantity demanded.
Yet, that doesn’t mean these two concepts of microeconomics are the same. The following article is aimed to demonstrate the difference between demand and quantity demanded to break down the existing confusion.
In general, if we demand something, this means we are claiming or wanting to buy something specific. But In economics, the idea of demand isn’t merely confined within desiring. It requires certain characteristics and actions to qualify an urge as demand.
However, the same words cannot be applied to the quantity demanded. Let me put it in a simple way; the term quantity demanded involves quantity and demanded. That may outwardly mean the quantity of something that has been demanded by someone or any group. That is right in a sense, but there is more.
When we depict the demand curve, we bring two factors into comparison: aggregate value/price of a good or service and the quantity demanded. If the price of a certain good or service changes, we see changes in specific points along the curve. More clearly saying, this means a change in quantity demanded. But, when the demand changes, we see the entire curve has shifted.
Therefore, changing the price of a good is not the only factor that changes the demand. The change in price is solely responsible for bringing a modification in the quantity demanded.
Demand is a principle concept of economics that refers to the desire and willingness to pay by the consumers for certain goods or services at different prices. On the other hand, quantity demanded is the amount of commodities or services that are demanded by the consumers at a specific price and period.
Table of Contents
|Definition||The desire and willingness to pay for certain goods and services at specific prices||The number of goods or services the consumers desire to purchase at specific prices.|
|What is||Thicker||Quantity demanded is the number of goods|
|Change||Factors change demand||Price changes demand|
|Change in Curve||The entire curve shifts||Movements along the curve|
|Determinants||Income, tastes, and preferences, income distribution, etc.||Price alone determines quantity demanded.|
What is demand?
Demand is basically the desire and willingness to pay by the consumers for a commodity at different prices. To qualify a desire as demand, it requires three things to take into account. These are:
- Desire to buy a certain good
- Have the ability to buy
- Willingness to pay
Let me show you an example. Suppose you are tech-savvy and you have a desire to buy a smartphone that costs 1000 dollars. Unfortunately, with your limited salary, it would be a tough job for you to afford one. According to demand theory, this won’t be deemed as demand.
If you have the desire and the ability to buy that costly smartphone, would that be counted as demand? Well, the answer is still no. Along with the desire and ability to buy, you need to have the willingness to pay for that smartphone.
So, clearly speaking, if you are a person who is approaching already to buy that smartphone, you are a person who is demanding.
The demand by any individual for certain good or service at different prices is referred to as individual demand. And the quantity demanded by everyone in a market for certain goods/services at different prices is called the market demand.
Change in demand
A shift in the demand curve reflects the desire to purchase by consumers against any commodity/service. When we see a shift in the position (left or right) of the demand curve, it indicates certain factors influencing the market and determining the state of demand.
So what factors determine demand state? There are several determinants of demand, such as income, tastes and preferences, the expectation by consumers for certain goods, and others. Here I am mentioning 8 factors that influence demand.
The income of the buyers is a crucial factor that drives demand. If the income of buyers falls, the demand will decrease, and vice versa.
Income distribution is an important factor that affects demand. A society with an equal and balanced income distribution has a higher level of demands against goods and services. That is because all income groups get access to the market equally. But in a society where the income distribution is unequal, the low-income people will get less opportunity to access the market. Hence, the demand falls.
The price of goods and services plays an essential role in determining the demand. When the price of goods and services increases or decreases, we see changes in the demand curve.
Change in customers’ Taste and preferences plays an influential role in determining the condition of demand. These tastes and preferences are generally influenced by the lucrative advertisements that persuade the consumers and bring a change in the market.
Population affects demand significantly. The higher number of consumers elevates the demand for goods and services. If a market has fewer consumers, there would be no possibility for a higher level of demand.
Consumer’s expectation regarding goods and services influences demand. For example, if a smartphone currently costs 800 dollars and a number of consumers expect the price of that smartphone will rise in the near future, these sorts of factors increase the number of consumers for certain goods and services. As a result, it brings a change in the demand.
Availability and convenience of buying certain products are significant determiners. If the suppliers struggle to provide products sufficiently to their consumers and the consumers don’t find it convenient to avail products, this will create a change in the market.
We sometimes try to search for old feature phones, but that happens less. Generally, if a product becomes unfashionable or unattractive to its consumers, the demand rate automatically falls. So fashion and style of a product are also considered a determinant of demand.
What is Quantity demanded?
Quantity demanded is the number of goods that a consumer purchases at a specific price. Let me elaborate on that with an example. Suppose for a 10 dollar price chocolate, you are buying 2 chocolates a day, at a 6 dollar price, you consume 4 chocolates a day, and at a price of 3 dollars, you purchase 5 chocolates a day.
So the number of your purchasing chocolates at different prices is the quantity demanded.
Therefore, according to that example, when the price of that chocolate is at 10 dollars, your quantity demanded is 2, at a 6 dollar price, your quantity demanded is 4 and when the price is 3 dollars, your quantity demanded is 5.
That’s why, when we draw the demand curve, we see changes along the curve at specific points. These points indicate the quantity demanded.
Change in Quantity demanded
When the price of certain commodity changes, we see a movement along the curve that indicates the change in quantity demanded. However, unlike demand, the only factor that influences quantity demanded is the price of the goods and services.
When the price of a specific commodity increase, the quantity demanded decreases, and if the price of a specific commodity decreases, the quantity demanded increases.
For example, if a 10 dollar price chocolate rises to 15 dollars, a consumer might buy less. That means, because of the increase in price, the quantity demanded has decreased.
The key differences between demand and quantity demanded
- Demand is the desire and willingness to pay by the consumers for certain goods and services at certain prices. Conversely, quantity demanded is the number of goods and services that the consumers are willing to pay at certain prices in a certain period.
- Demand is a desire and willingness to pay for commodities, and quantity demanded is the number of goods.
- There are several determinants of demand, such as the price of goods and services, the income of buyers, tastes and preferences, income distribution, etc. On the other hand, the only factor that determines the quantity demanded is the price of the commodity or service.
- When demand changes, the demand curve shifts. And, when the quantity demanded changes, we see movements along the curve.
- Change in factors shifts the demand curve. Contrarily, a Change in price changes the quantity demanded.
Demand curve graph
The demand graph is a visual representation of demand. The horizontal line shows the quantity demanded, and the vertical line shows the price of the commodity or service. Generally, the horizontal line is represented by X, and the vertical line is represented by Y.
The curve drawn in the demand graph is called the demand curve that is determined by the junction of price and quantity demanded.
Frequently asked questions (FAQs):
Does price affect demand or quantity demanded?
Quantity demanded depends on the change in price. If the price of any commodity increases, the quantity demanded decreases, and if the price of a commodity decreases, the quantity demanded increases.
What is the difference between demand and supply?
Demand is the desire and willingness to pay for certain goods and services by the consumers at a certain price. On the other hand, supply is the total number of commodities in the market that is available to its customers.
What Is a Decrease in Quantity Demanded?
A decrease in quantity demanded means the price of a certain good or service has increased. If the price has increased, that means the consumer will demand fewer commodities.
Demand is a fundamental economic concept that indicates the desire and willingness of the consumers. On the other hand, quantity demanded is the quantity of goods that the consumers are willing to pay at a particular price. This article has articulated the difference between demand and quantity demanded to clarify our readers’ confusion.
Patricia is an entrepreneur and an investment advisor. She has a master’s degree in economics with a tremendous academic background. Patricia loves to read books and do research. Monopoly is the game that she loves to play during her leisure.