Q&A - What is market demand?

Jim Riley

1st May 2009

Demand is the quantity of a good or service that consumers and businesses are willing and able to buy at a given price in a given time period.

Market demand is the sum of the individual demand for a product from buyers in the market.  If more buyers enter the market and they have the ability to pay for items on sale, then market demand at each price level will rise.

In theory, the level of market demand at a range of prices can be shown graphically as a demand curve. Here is an example:

How useful is a demand curve? It is certainly useful for a business to be able to forecast what happens to potential demand from a change in price.  However, in reality, a business is restricted in its ability to change prices significantly and often.

Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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