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What is demand?

Demand is a concept taught in economics.  It is used to describe a consumer's desire for a specific item or service.  Demand also includes that consumer's ability to actually purchase the item.  Because of that two-part definition, price has a large influence on demand.  For example, I really would like to own a Porsche someday.  I can't come close to affording one though.  My desire for the item is high, but my ability to actually purchase it is low; therefore, my overall demand is not that high.  Contrast that with a hamburger from In-N-Out.   I really like those things, and I can afford them.  My overall demand is high.  


Generally speaking, an increase in price tends to lower overall demand for an item.  Keep in mind too that aggregate demand and individual demand are two different things.  Individual demand is my demand (or yours) for a particular good or service.  Aggregate demand deals with a large market population.  I might not desire a particular product, but maybe the general population does; therefore, the demand is unaffected by my opinion.  For example, I have zero desire to own an iPhone, but Apple is not hurting for business because of my low demand.  Overall aggregate demand is still high.  

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