What is Demand? (In relation to quantity demand)
Demand represents the entire relationship between the price of a good and the quantity consumers are willing and able to purchase at various price points, holding all other factors constant (ceteris paribus).
In simple words:
“Demand is a schedule or curve showing various quantities demanded at various prices.”
Key characteristics of Demand:
- It represents the entire demand curve.
- It shows the relationship across all possible prices.
- It can be expressed as a demand schedule or demand curve.
- It changes when non-price determinants changes.
- It can be represented by the equation: \(Q_d=f(P,Y,P_r,T,E,N)\), Where:
- \(Q_d\)= Quantity Demanded
- \(P\)= Price of the good
- \(Y\)= Consumer Income
- \(T\)= Consumer Tasted and Preferences
- \(E\)= Expectations of consumers
- \(N\)= Number of consumers
What is Quantity Demanded?
Quantity Demanded refers to the specific amount of a good that consumers are willing and able to purchase at a particular price point, at a specific time.
In simple words:
“Quantity demanded is a single point on the demand curve.”
Key characteristics of quantity Demanded:
- It represents a single point on the demand curve.
- It is associated with one specific price.
- It changes only when the price of the good itself changes.
- It shows movement along the demand curve.
- It is expressed as a specific numerical value
Difference between Demand and Quantity Demanded
| Aspect | Demand | Quantity Demanded |
| Definition | Entire price-quantity relationship | Specific quantity at a specific price |
| Representation | Complete demand curve | Single point on demand curve |
| Change Caused By | Non-price determinants | Price of the good only |
| Type of Change | Shift of the curve | Movement along the curve |
| Graphical Effect | Curve shifts left or right | Point moves up or down the same curve |
| Terminology | “Change in demand” | “Change in quantity demanded” |
Graphical Presentation of Change in Demand and Change in Quantity Demanded
Practical Examples: Demand and Quantity Demanded
Example 1: Smartphone Market
Change in Demand:
When Apple launches a highly anticipated iPhone with revolutionary features, consumer preferences shift. The entire demand curve for that iPhone shifts right, even at the same price points. This is a change in demand.
Change in Quantity Demanded:
During Black Friday, if Apple reduces the iPhone price from $999 to $799, more consumers purchase it. This is a change in quantity demanded i.e., movement along the existing demand curve.
Example 2: Coffee Market
Change in Demand:
A medical study reveals that coffee has significant health benefits. Consumer preferences change, and the demand curve for coffee shifts right. More coffee is demanded at every price level. This is a change in demand.
Change in Quantity Demanded:
Your local café increases coffee price from $3 to $5 per cup. You reduce your coffee consumption from 5 cups weekly to 3 cups. This is a change in quantity demanded because you’re responding to price change alone.
Example 3: Electric Vehicle (EVs)
Change in Demand:
Government introduces a $7500 tax credit for EV purchases. This effectively increases consumer purchasing power, shifting the demand curve for EVs right. This is change in demand.
Change in Quantity Demanded:
Tesla reduces the price of Model 3 from $45,000 to $40,000. More consumers buy the Model 3 at this lower price. This is a change in quantity demanded.
Conclusion
The difference between demand and quantity demanded is one the most important concepts in microeconomics. While demand represents the entire relationship between price and quantity, quantity demanded refers to a specific amount purchased at a specific price.
“Movement along the curve = Change in quantity demanded”
“Shift of the curve = Change in demand”