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In economics, demand is the amount of a good or service consumers are willing and able to buy at different prices. It is a relationship between prices and quantities—not just a desire to own something. The amount buyers would purchase at one specific price is called quantity demanded.
What demand means
Demand includes both willingness and ability to pay. A person may want a product, but that want alone does not count as effective market demand if they cannot afford to buy it.
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Economists describe demand across a range of possible prices. A demand schedule lists the quantity buyers would purchase at each price; a demand curve shows those same price-and-quantity pairings on a graph. Price is usually on the vertical axis and quantity on the horizontal axis. The schedule and curve are two ways to show the same relationship, not different definitions of demand. OpenStax explains demand schedules and curves.
Demand vs. quantity demanded
Demand refers to the whole relationship between prices and the quantities buyers are willing and able to purchase. Quantity demanded refers to the amount associated with one particular price.
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- A change in the good’s own price: usually changes quantity demanded. On a graph, this is movement to another point on the same demand curve.
- A change in another relevant factor: changes demand. On a graph, the entire curve shifts because buyers’ planned purchases change at each price.
This distinction prevents a common error: under the standard model, a price increase does not shift the demand curve for that good. It changes quantity demanded along the curve. The Federal Reserve Bank of St. Louis describes the distinction between demand and quantity demanded.
How the law of demand works
The law of demand says that, other things being equal, a higher price generally leads buyers to purchase less, while a lower price generally leads them to purchase more. “Other things being equal” matters: the principle isolates the relationship between a good’s price and quantity demanded while assuming other relevant conditions have not changed.
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For example, if the price of a particular product falls and buyers respond by purchasing more, that is an increase in quantity demanded. If buyers become more interested in the product for reasons unrelated to its price, demand has changed instead.
What can shift demand?
Several factors can change how much buyers are willing and able to purchase at every price. Their effects depend on the good and the circumstances; a change does not affect every buyer or product in the same way.
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- Income: For a normal good, higher income tends to increase demand. For an inferior good, demand can move in the opposite direction as income rises.
- Tastes and preferences: A change in what consumers like can raise or lower demand.
- Population: A change in the number of potential buyers can affect total market demand.
- Prices of related goods: If two goods are substitutes, a higher price for one can make the other more attractive. If they are complements—goods often used together—a higher price for one can make buyers less likely to purchase the paired good.
- Expectations: Beliefs about future prices or conditions can affect buying decisions now.
These are shifts in demand because they can change planned purchases at a range of prices, rather than merely moving buyers to a different point on the existing curve. OpenStax outlines these demand shifters in its summary of key concepts in economics and its discussion of shifts in demand and supply.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Where elasticity fits
Elasticity describes how responsive one variable is to a change in another. Price elasticity of demand, for example, describes how quantity demanded responds to a change in price. It helps compare the size of responses, but there is no single elasticity value that applies to all goods or markets. OpenStax introduces the concept in its introduction to elasticity.
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