Civics Today: Citizenship, Economics, & You

Chapter 20: Demand

Chapter Overviews

In economics, demand refers to the desire, willingness, and ability to buy a good or service. According to the law of demand, the higher the price of a good or service the lower the demand for it. Quantity demanded and price move in opposite directions. Businesses study market demand in order to plan effectively. There are many factors that affect demand, including changes in the number of consumers, changes in consumers' incomes, changes in consumers' tastes, and changes in substitutes and complements. For some goods and services, demand is elastic. A change in the price of these goods causes a relatively larger change in demand. For other goods and services—such as medicines—demand is inelastic, and changes in price have little effect on the quantity demanded.