The most important economic issue: what is the demand?

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Everyone needs a certain set of benefits, allowing it to meet the needs.For the goods and services that the consumer is not able to produce on their own, he goes to the market.At this point, there is a demand.And it is interesting that for the understanding of the processes occurring in the market, it is important not so much the desire to acquire goods as a real opportunity to do so.Everyone now has a rough idea of ​​what the demand is.But very few people aware of it.For economists, the notion of demand is fundamental.


called Demand needs of customers in any product or service that is backed by real money.

For economists, it is important to the concept of the value of demand, defined as the maximum amount of benefits that consumers want to buy at the moment, the existing market price.Intuitively, this indicator has an inverse relationship of the price, in other words, the greater the cost, the less willing to purchase goods buyers, and vice versa.This relationship is called the law of supply.

image on the chart this pattern allows you to visualize the effect of a law, and to understand what the demand is.This schedule is usually called the demand curve.

work of the law is due to the action of two complementary phenomena:

- price drop at constant nominal income leads to a greater number of opportunities to buy goods, so the demand increases, this phenomenon is called the income effect;

- increase in prices for a particular product leads to the fact that the buyers will try to replace it with a cheaper - it is the substitution effect.

How is the demand

Along with the price of goods on the formation of demand affects a huge number of factors.It can change with the same value under the influence:

  1. Irregular consumer preferences.Demand for the product may increase if it becomes fashionable and popular.
  2. income growth.Under the influence of this factor is demand for conventional products is growing.However, there are benefits related to a lower category, the number of sales is inversely related to the level of income.
  3. cost of other benefits.The economy recovered such concepts as interchangeable and complementary products.We will understand more what the demand for such goods.

substitute goods under certain conditions can replace each other.For example, tea and coffee, a variety of brands of cigarettes.In the case of growth of the price for one of these products, many buyers prefer to use other, so the demand for it will increase.

with complementary benefits vice versa.With the growth of the price of one of them, its consumption will decrease, leading to a reduction in demand for the other.These goods are those that can not be used without the other.For example, a significant increase in demand for cars will result in an increase in fuel sales.

Studying economics invariably begins with an understanding of what the demand is.Economists had withdrawn the laws of change is so huge role that many scientists even describe them as the first law of economics.