DEFINITION: “Demand,” in the economic sense, is the amount of a given good that consumers are able and willing to purchase on the open market at a given time and place.
ETYMOLOGY: The English noun “demand” derives, via Middle English and Middle French, from the Medieval Latin verb demando, demandare.
Demando, in turn, derives from the combination of the classical Latin preposition de, meaning “from,” and the verb, mando, mandare, meaning “to commit to someone’s charge,” “to order,” or “to command.”
USAGE: Demand for a specific good is a function of the good’s price and its perceived necessity, quality, convenience, and available alternatives, plus the purchaser’s tastes and disposable income, as well as many other factors.
Among the additional factors are such things as fashion and changes in fashion—what Thorstein Veblen called “conspicuous consumption” in his classic 1899 study, The Theory of the Leisure Class.
Demand is also strongly affected by consumer confidence, which has to do with the expectations of consumers regarding (1) the future price or availability of goods they are contemplating purchasing; (2) their own personal future income and general financial situation, and (3) any expectations they may have about the future performance of the economy, as a whole.
Finally, demand is a function of population growth. Clearly, more people enable more goods to be produced (greater supply). By the same token, more people bring with them their own consumer needs and desires, thus creating greater demand, as well.
There are several more concepts which are specific to the concept of economic demand.
For instance, one may speak of the ”latent demand” in a marketplace, meaning the potential demand for a product that does not yet exist.
The idea behind latent demand is that it is a sort of force which, were a particular good to come into existence, would lead consumers to purchase it right away. It is a kind of demand, which, as it were, neither the supplier nor the consumer himself knew existed until the supply came along to satisfy it.
Another aspect of demand is the extent to which it can be shaped by the active manipulation of perceptions by others. As everyone knows, there is an entire industry which exists to do just this, namely, the advertising industry.
Finally, yet another aspect of demand is its “elasticity,” which is the degree to which it is sensitive to price. As one might imagine, this is a very important feature of demand that has long been an object of study by economists.