Difference Between Quantity Demanded and Demand
The meaning of quantity demanded and demand should not cause confusion. They mean two different things and have their own significance in the world of economics. They can be distinguished by knowing the exact meaning of each one of them.
In economics, demand is defined as the will to buy something that someone can afford. This means that the product -the person is interested in- should be within his financial reach. The desire to own something alone cannot be called a demand; the person should be able to pay for it too. On the other hand, if someone has money, but is not willing to pay for something, then it is not referredÂ as a demand either. Only the combination of the willingness and the affordability will be considered as a demand.
The idea of a demand is very important in economical analysis. The proper understanding of demand can give someone a good command in his business tactics. From the business point of view, demand can indicate the possible sales that take place. If the provider or manufacturer knows that people can afford his goods, then he can consider them as customers.
Also, he needs to be sure that the people areÂ willing to buy the product he is selling. Then, he can make plans for the future such as what type of product is to be made more often and the price should of the product. In this light, demand means definite sales in business. By knowing the approximate demand of a product, the supplier can be sure about the sales that are going to take place and he can calculate the profits or losses. A smart businessman would guess the demand before hand and would take steps accordingly.
The world of economics also uses demand to guess the situation of the market. They record demands in regular intervals. There is a common sense of relationship between demand and price. Generally, when price increases, demand decreases and oppositely when price decreases, demand increases. Economists put the price and demand on a curve, along with the regular time period on a graph. This curve is sloped down, showing how the increment of prices is affected by the demand in various instances.
Supply often comes with demand. Hence the phrase supply and demand become parallel. Generally, when demand rises, supply increases and when demand falls, supply is decreased.
Quantity demanded is another powerful term that can govern an investor’s activity. It indicates the sum of the amount of services or goods’ demand at any given time. It does not depend on the equilibrium of the market. Quantity of demand is calculated or estimated after the sales take place. This is done to get the business’ condition. The quantity demanded lies in the demand curve and can be determined by just assuming a point and calculating its intercepts, on the price and quantity planes respectively.
When some provides the information of the quantity of goods demanded, it can then affect the amount of goods being purchased. From the above discussion, it can be seen that demand is often controlled by the quantity demanded and regardless of their differences; they are both very important terms in economics and investments.
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