Quantity Demanded
What is Quantity Demanded?
Quantity demanded is the amount of a good or service consumers are willing and able to purchase at a given price.
The quantity demanded is determined by the market price, holding all else constant. As price rises, quantity demanded falls. Producers use the concept to determine output levels and pricing strategies. It is graphically represented by the demand curve.
Quantity Demanded: a worked example
Three buyers share a small market for reusable water bottles. At a price of $12, Ana's quantity demanded is 2 bottles, Ben's is 5, and Cleo's is 3, so market quantity demanded at $12 is 2 + 5 + 3 = 10 bottles. Market demand is the horizontal sum of individual quantities demanded at each price. Suppose the market demand equation is Qd = 34 - 2P. At P = $12, Qd = 34 - 24 = 10, which matches the sum. At P = $15, Qd = 34 - 30 = 4 bottles, so a $3 price increase cut quantity demanded by 6 bottles. Buyer spending drops from 10 x $12 = $120 to 4 x $15 = $60. Each figure is one point on a single unchanged demand curve.
The mistake students make with quantity demanded
Quantity demanded gets reported as a standing fact about the good, as in the quantity demanded for water bottles is 10. That number means nothing without its price attached, because 10 belongs to $12 while 4 belongs to $15 on the very same curve, so name the price every time you state one. The other slip is dropping the able half of willing and able. A student who wants a $900 bicycle but has no way to pay for it contributes zero to quantity demanded at $900, since desire counts only when purchasing power stands behind it.
Quantity Demanded questions
How do you calculate quantity demanded from a demand equation?
Substitute the price into the equation and solve. Given Qd = 34 - 2P, a price of $9 yields Qd = 34 - 18 = 16 units. When the demand curve arrives in inverse form, such as P = 17 - 0.5Q, rearrange to isolate Q before substituting. Always report the answer alongside the price it belongs to, because quantity demanded carries no meaning detached from a specific price.
Is quantity demanded the same as the amount actually bought?
Quantity demanded and quantity purchased match only when the market clears at the going price. Under a binding price ceiling, buyers want more than sellers will provide, so purchases equal the smaller quantity supplied while quantity demanded stays higher. The difference between the two figures is the shortage. In an unregulated market at equilibrium the two numbers coincide, which is why the distinction is easy to overlook.
How is market quantity demanded found from individual buyers?
Market quantity demanded at a given price is the sum of every individual buyer's quantity demanded at that same price. Economists call the operation horizontal summation, because quantities are added across at a fixed price rather than prices being added up. Repeat the sum at each price to trace out the whole market demand curve. A buyer who wants none of the good at that price contributes zero.
This is the live Supply and Demand sandbox. Drag the curves, or open the full version.
Related terms
Common comparisons
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