Demand

Demand is the quantity of a good or service that consumers are willing AND able to buy at each price during a time period. Both willingness and ability matter — a wish without purchasing power isn't demand.

The law of demand — as price rises, quantity demanded falls (and vice versa), ceteris paribus. This gives the demand curve its downward slope.

Two reasons:

• Income effect — higher price reduces real purchasing power.
• Substitution effect — higher price makes substitutes relatively cheaper, so consumers switch.

Movement ALONG the demand curve = change in quantity demanded caused by a change in the good's own price. Curve doesn't shift.

Shift of the demand curve = change in demand at every price, caused by a change in a NON-PRICE determinant:

Determinant	Effect
Income (normal good)	Income ↑ → demand ↑ (curve shifts right)
Income (inferior good)	Income ↑ → demand ↓ (curve shifts left)
Substitute price	Substitute price ↑ → demand for this good ↑
Complement price	Complement price ↑ → demand for this good ↓
Tastes/preferences	Favourable change → demand ↑
Expectations	Expected future price ↑ → demand now ↑
Number of buyers	More buyers → demand ↑

Worked example. If the price of coffee rises:

• MOVEMENT along demand curve for coffee — quantity demanded falls.
• SHIFT of demand curve for tea (substitute) — demand for tea rises.

Individual → market demand. Add up the quantity demanded by each consumer at each price (horizontal summation).