Economic Report

Demand In economics, we need to use terms a little more carefully than they are sometimes used in ordinary discussions. In general use, "Demand" is a word that can have more than one meaning, but in microeconomics we define it more carefully so that it has only one meaning. Here is the definition: Definition: Demand Demand is the relationship between price and quantity demanded for a particular good and service in particular circumstances. For each …

…or the quantity in a particular line of the table. Notice that, in this example, the demand curve is downward sloping. That's a common-sense point: the higher the price, the less people will want to buy. In this case, common-sense has it 100% right. Economists call this the Law of Demand: At a higher price, the quantity demanded will be less, ceteris paribus. (Ceteris paribus means: if nothing else changes to offset the change in price).