- Demand
- Demand is the amount of a good or service consumers are willing and able to purchase at each price.
- Quantity demanded
- Quantity demanded is the amount bought at one particular price, a single point on the demand curve.
The law of demand says the two move in opposite directions
Price and quantity demanded move in opposite directions. When the price of a good rises the quantity people buy falls, and when the price falls the quantity rises. Demand itself has not changed in either case; only the point being read on it has moved.
Demand is a whole schedule rather than a single number
A demand schedule shows the quantity demanded at each and every price, and the demand curve is that schedule drawn as a graph. So demand is the whole relationship and quantity demanded is one point on it. Asking what the demand for coffee is has no single answer until a price is named.
Check yourself
The price of coffee falls and shops sell more of it. What has happened?
Can you think of an example before you look?
At £4 a cup a coffee shop sells 60 cups a day; at £3 it sells 90; at £2 it sells 140. Those three pairs are three points on one demand curve. The demand is the whole list, and each single figure is a quantity demanded.
The curve slopes down because the two move opposite ways
Because a higher price brings a lower quantity demanded, a demand curve slopes downwards from left to right. That slope is the law of demand drawn out: every point on it pairs a price with the amount buyers would take at that price.
Check yourself
The price of this good rises from P1 to P2. Which point shows the quantity buyers now demand?
A is on the same demand curve at the higher price P2, so buyers want less: the quantity demanded falls, and nothing shifts.
B sits at the higher price but off the demand curve, at a larger quantity. Buyers take less at a higher price, not more.
C is where buyers were at the old price P1. After the rise they move up along the curve to a smaller quantity.
Isn't demand just how much people want something?
No, on two counts. Demand counts what buyers are willing and able to purchase, so a wish with no money behind it is not demand at all. And demand is a schedule rather than a figure: saying the demand for coffee is 90 cups means nothing until a price is attached to it. The commonest slip of all is writing that demand rose when the price fell — at a lower price quantity demanded rose, and demand did not move.
Use "quantity demanded" whenever the good's own price has changed, and "demand" only when something else has. Writing that demand rose because the price fell loses the mark however sound the rest of the answer is. And when defining demand, say willing and able — the second half of that pair is worth a mark on its own.
Check yourself
Which of these changes demand rather than quantity demanded?
Exam question
Distinguish between demand and quantity demanded. [2]
Demand is the whole schedule of amounts consumers are willing and able to buy at each price; quantity demanded is the amount bought at one particular price.
One mark for each. The examiner wants the schedule-versus-point contrast rather than two loose paraphrases, so name the price in the second half.
Demand is the amount consumers are willing and able to purchase at each price — a whole schedule, drawn as the demand curve. Quantity demanded is one point on it, the amount bought at one price. The law of demand makes the relationship inverse, so the curve slopes down. A change in the good's own price moves you along that curve; a change in anything else moves the curve itself.