The quantity of a good or service demanded by an individual household is called the Individual Demand. The sum total of all such demands over a period of time for any commodity in the market is described as Market Demand.
What is Demand?
In economics, demand is how much of a product or service is demanded at a given price. In the real world, this can be quantified in terms of wholesale prices and retail prices. A sudden change in demand will result in a shift along the supply curve if it results from a change that does not affect the cost of production.
What is the definition of Individual Demand?
Individual demand refers to the desire or wants for a particular product or service that an individual has. The amount of money that one is willing and able to spend on a good can be analyzed by looking at different types of products. For example, if you were to look at consumer goods versus capital goods, there could be a difference in the amount of money someone is willing to spend on each type.
What are some examples of Individual Demand?
Some examples include –
- The amount of gasoline that is demanded by an individual on any given day.
- The amount of money that someone spends on a pair of shoes versus the amount spent on a car.
What is the meaning of Market Demand?
Market demand refers to the total amount of a good or service that consumers in general are willing and able to buy at any given price. It is important to note that the Market Demand curve will shift based on changes in supply, prices, income levels, etc. Examples of Market Demand include –
- The total amount of gasoline that is demanded by consumers in general.
- The total amount of money that consumers, in general, will spend on a particular good or service.
Individual Demand vs Market Demand: What’s the difference?
The main difference between individual demand and market demand comes down to the fact that market demand includes everyone in a given market, while individual demand only takes into account, one person.
Some major differences between Individual Demand and Market Demand are –
- Individual demand only considers the wants and needs of one person. In contrast, Market demand can be measured as a whole, such as by looking at market data.
- Individual demand is based on an individual‘s willingness and ability to buy any given product or service at any given price point due to their own personal preferences. Market demand is based on the willingness and ability of all individuals in a market to buy a good at any given price.
- Individual demand can be analyzed by looking at individual preferences for specific goods, while market demands are determined by the entire population‘s preferences for products or services.
- Individual demand can take into account income, wealth, and any other economic factors that are specific to the person in question. Market demand only looks at macroeconomic factors such as inflation rates or GDP growth rates when determining how much of a good or service people will buy at any given point in time.
- Individual demand will change based on a person‘s age, economic status, and other factors that are specific to the individual in question. Market demand can only be altered by macroeconomic factors such as inflation rates or GDP growth rates.
- Individual demand has no relation to how much of a good or service is produced in a given market. Market demand is based on how much of a good or service is produced in a given market and will change if production levels rise or fall.
- Individual demand only takes into account how an individual views certain goods and services, while market demand can take into account the entire population‘s viewpoint on a product or service.
- Individual demand can be analyzed by looking at individual consumption patterns, while market demands are determined through consumption data that is collected for all individuals in a given population or economy.