Computers and Technology
Submitted By prancesann
In economics, demand is an economic principle that describes a consumer's desire, willingness and ability to pay a price for a specific good or service. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time.
Economists record demand on a demand schedule and plot it on a graph as a demand curve that is usually downward sloping. The downward slope reflects the negative or inverse relationship between price and quantity demanded: as price decreases, quantity demanded increases. In principle, each consumer has a demand curve for any product that he or she is willing and able to buy, and the consumer's demand curve is equal to the marginal utility (benefit) curve. When the demand curves of all consumers are added up horizontally,the result is the market demand curve for that product which also indicates a negative or inverse relationship between the price and quantity demanded. If there are no externalities, the market demand curve is also equal to the social utility (benefit) curve.
The demand equation is the mathematical expression of the relationship between the quantity of a good demanded and those factors that affect the willingness and ability of a consumer to buy the good. For example, Qd = f(P; Prg, Y) is a demand equation where Qd is the quantity of a good demanded, P is the price of the good, Prg is the price of a related good, and Y is income; the function on the right side of the equation is called the demand function. The semi-colon in the list of arguments in the demand function means that the variables to the right are being held…...