Quantity Demanded
Definition
Quantity demanded is the total amount of a specific good or service that consumers are willing and able to purchase at a given price level in a specified time period. It is a fundamental concept in microeconomics that illustrates consumer purchasing behavior in response to changes in price. The quantity demanded is represented by a point on a demand curve, where each point corresponds to a price level and the quantity consumers will buy at that price.
Examples
- Hot Dog Stand: If a hot dog stand sells hot dogs for $3 each and at this price, the stand finds that consumers will purchase 50 hot dogs per day, the quantity demanded of hot dogs at $3 is 50.
- Concert Tickets: Suppose concert tickets are priced at $100, and at this price, 5,000 fans buy tickets. Therefore, the quantity demanded of tickets at $100 is 5,000.
- Smartphones: If a smartphone is sold at $400 and 1 million units are sold at this price, the quantity demanded for smartphones is 1 million at $400.
Frequently Asked Questions (FAQs)
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Q: What influences the quantity demanded of a product?
- A: Several factors influence the quantity demanded, including the product’s price, consumer income, tastes and preferences, expectations of future prices, and the prices of related goods.
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Q: What is the difference between quantity demanded and demand?
- A: Quantity demanded refers to the specific amount of a good buyers are willing to purchase at a given price, while demand represents the relationship between price and quantity demanded over a range of prices.
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Q: How does a change in price affect quantity demanded?
- A: Generally, a decrease in price will increase the quantity demanded, while an increase in price will decrease the quantity demanded, assuming other factors remain constant (Law of Demand).
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Q: What is the aggregate demand curve?
- A: The aggregate demand curve shows the total quantity of all goods and services demanded in an economy at different price levels.
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Q: Can quantity demanded ever be zero?
- A: Yes, quantity demanded can be zero if the price is too high for consumers or if there is no desire or necessity for the product.
Related Terms with Definitions
- Aggregate Demand Curve: A graphical representation showing the relationship between the price level of all goods and services and the total quantity demanded in an economy.
- Law of Demand: An economic principle that states that, ceteris paribus, an increase in price leads to a decrease in quantity demanded, and a decrease in price leads to an increase in quantity demanded.
- Elasticity of Demand: A measure of how much the quantity demanded of a good responds to a change in its price.
- Substitute Goods: Goods that can be used in place of another good, thus impacting the quantity demanded of the original good.
- Complementary Goods: Goods that are often used together, where an increase in the quantity demanded of one leads to an increase in the quantity demanded of the other.
Online References
Suggested Books for Further Studies
- “Principles of Economics” by N. Gregory Mankiw
- “Microeconomics” by Robert S. Pindyck and Daniel L. Rubinfeld
- “Microeconomic Theory: Basic Principles and Extensions” by Walter Nicholson and Christopher Snyder
Fundamentals of Quantity Demanded: Economics Basics Quiz
### Which of the following defines quantity demanded?
- [ ] The total amount of a good produced in a market.
- [x] The specific amount of a good that consumers are willing and able to purchase at a given price.
- [ ] The total revenue generated from selling a certain good.
- [ ] The cost of producing a specific amount of a good.
> **Explanation:** Quantity demanded refers to the specific amount of a good consumers are willing and able to purchase at a given price level.
### What generally happens to the quantity demanded when the price of a good decreases?
- [x] Quantity demanded increases.
- [ ] Quantity demanded decreases.
- [ ] Quantity demanded remains the same.
- [ ] Quantity demanded becomes zero.
> **Explanation:** According to the Law of Demand, a decrease in the price of a good generally leads to an increase in quantity demanded.
### What does a point on a demand curve represent?
- [ ] The total income in the market.
- [ ] The equilibrium price and quantity.
- [x] The quantity demanded of a good at a specific price.
- [ ] The production cost of the good.
> **Explanation:** Each point on a demand curve represents the quantity demanded of a good at a specific price.
### What is the Law of Demand?
- [ ] It states that the quantity demanded of a good is independent of its price.
- [x] It states that, ceteris paribus, an increase in price leads to a decrease in quantity demanded.
- [ ] It suggests that demand remains constant regardless of price changes.
- [ ] It explains the production capacity of firms.
> **Explanation:** The Law of Demand states that, keeping other factors constant, an increase in the price of a good leads to a decrease in quantity demanded, and vice versa.
### Which of the following factors does NOT directly influence quantity demanded?
- [ ] Consumer income
- [ ] Consumer preferences
- [x] Production technology
- [ ] Prices of related goods
> **Explanation:** Production technology directly influences the supply side of the market rather than the demand side.
### What does an aggregate demand curve illustrate?
- [ ] The supply of goods at various prices.
- [x] The total quantity of all goods demanded at various price levels in the economy.
- [ ] The cost of production at different price points.
- [ ] The equilibrium of supply and demand.
> **Explanation:** An aggregate demand curve shows the total quantity of all goods and services demanded in an economy at different price levels.
### How do substitute goods affect quantity demanded?
- [x] A price increase in a substitute good increases the quantity demanded of the original good.
- [ ] Substitute goods and quantity demanded are not related.
- [ ] They decrease the production cost of the original good.
- [ ] There is no effect on quantity demanded when the price of substitutes changes.
> **Explanation:** If the price of a substitute good increases, consumers may switch to the original good, increasing the quantity demanded.
### If concert tickets are priced at $150 and quantity demanded is 3,000 tickets, what happens if the price drops to $100?
- [ ] The quantity demanded will likely decrease.
- [x] The quantity demanded will likely increase.
- [ ] The number of tickets sold will remain the same.
- [ ] The concert will be canceled.
> **Explanation:** According to the Law of Demand, a drop in price typically results in an increase in quantity demanded for concert tickets.
### Which type of good sees an increase in quantity demanded when its complement's price decreases?
- [ ] Substitute good
- [x] Complementary good
- [ ] Inferior good
- [ ] Depreciable good
> **Explanation:** Complementary goods are used together; if the price of one decreases, the quantity demanded of both usually increases.
### What is price elasticity of demand?
- [ ] It measures the sensitivity of consumer income to price changes.
- [x] It measures how the quantity demanded of a good changes in response to a change in price.
- [ ] It measures the total market supply.
- [ ] It calculates the optimal production level.
> **Explanation:** Price elasticity of demand measures how the quantity demanded varies with a change in price, indicating consumers' sensitivity to price changes.
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