Understanding demand - Understandingdemand Whatismeantbydemand

Understanding demand - Understandingdemand...

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Understanding demandWhat is meant by demand?Demand is the quantity of a good or service that consumers are willing and able to buy at a given price in a given time period.Each of us has an individual demand for particular goods and services and ourdemand at each price reflects the value that we place on a product, linked usually to the enjoyment or usefulness that we expect from consuming it. Economists give this a term - utilityEffective demandDemand is different to desire! Effective demand is when a desire to buy a product is backed up by an ability to pay for itLatent DemandLatent demand exists when there is willingness to buy among people for a good or service, but where consumers lack the purchasing power to be able to afford the product.Derived DemandThe demand for a product X might be connected to the demand for a related product Y– giving rise to the idea of a derived demand. For example, demand for steel is strongly linked to the demand for new vehicles and other manufactured products, so that when an economy goes into a recession, so we expect the demand for steel to decline likewise.Steel is a cyclical industry which means that market demand for steel is affected by changes in the economic cycle and also by fluctuations in the exchange rate.The demand for new bricks is derived from the demand for the final output of theconstruction industry- when there is a recovery in the British building industry, so themarket demand for bricks will increaseZinc is a good example of a product with a strong derived demand. It has a wide-rangeof end uses such as galvanised zinc used in cars and new buildings, die-casting used in door furniture and toys, brass and bronze used in taps and pipes. And also rolled zinc (used in roofing, guttering and batteries) and in chemicals used in making tyres 
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and zinc cream.
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