What is Demand? - Explained

What is Demand? - Explained

Image by Mike Cohen in Flickr under Commercial Use Allowed Category

Each and everything which exists in the world is there for a requirement by a business or by general public. The requirement to have something is know as the demand. Demand is a extreme important factor for any business and entrepreneur in the world. There are various types of demand which does exists. Essential demand, relative demand are few examples for types of demand. Demand more or less depending on how mass psychology works in the world except for essential demand factors.

Essential goods, water, fuel are few examples for consumer goods which does have a higher demand because these are essential to achieve daily human needs. A business to become successful, it needs to provide the services or products where there's a true and sustainable demand by the general public or specific consumer group.

Though if there's a good demand from the consumers, it's important to understand for what exact quantity the demand exists in the market. Unless the consumer will eventually get more bargaining power for a particular service or to a product in the market due to over supply of the product or service.

It's mandatory to understand the concept of demand vs supply because increasing of supply without similar demand could cause a lower price in the market. Higher demand with lower supply could bring higher price for the service or the product which there.

Supply & Demand Graph

Above two axis graph showcase how the supply and demand affect and possible impact towards the price variation with the quantity. The perfect point which is equilibrium point where price, quantity, supply and demand. Understanding the supply and demand and how it affect price of a product or service.