The Difference Between “Demand” and “Quantity Demanded”

In my 7 years tutoring students for JC Economics, there were more than a few common mistakes students make that I often have to correct.

And none more so than using the terms “Demand” and “Quantity Demanded” interchangeably. The same went as well for “Supply” and “Quantity Supplied”.

The Demand Function

Strictly speaking when we say “Demand”, we are in fact referring to the “Demand Function”, or more commonly known amongst students as the “Demand Curve”, when represented graphically.

Fundamentally, the Demand Function refers to the “amount of a product demanded for each combination of price and the other factors“.

For “A” level, what students often refer to as the “Demand” is actually the mapping of the correlation between price and the quantity that is demanded for (i.e. the “Quantity Demanded”).

The “Demand” as we know it, is therefore best represented mathematically as:

Q = D(P)

where Q = Quantity Demanded, P = Price, and D is the Demand Function.

This can be seen in the figure below.

Thus, the “Demand” determines the “Quantity Demanded” for a given price. 

Price therefore determines the “Quantity Demanded” given the “Demand”. Make sure this logic flow is understood well!

Now apply the same concepts highlighted above to the “Supply Function” and you will see that the same holds true for “Supply” and “Quantity Supplied”.

So this is probably a trivial issue…

But I can’t stress enough how important it is to nail this fundamental concept. There are 2 major reasons for that:

1) You can’t afford to waste time during the exam

JC students are of course aware that the Economics exam at “A” level is a furious writing sprint for up to 3 hours.

It is therefore imperative that the thought process is sound (no doubts whatsoever in your mind), and accurate (get the writing right on the first attempt).

2) You will be misunderstood

During my tuition sessions, I make my students verbalise the concepts as much as possible. 

It’s not because I am lazy to speak. But it’s more because I have realised it is important for me to nip students’ conceptual issues in the bud. And the only effective way to do this is to encourage students to tell me what is on their mind.

Often, I hear my students say:

“When the price decreases, the Demand increases”

i.e. The Demand Curve shifts up when the price decreases (The logic flow has become reversed)!

“When the Quantity Demanded decreases, the price will drop”

i.e. The price decreases when the amount of product demanded at that specific price decreases. (This is a really weird circular argument, see the definition of “Demand Function”)

My first reaction in my head is invariably that big fat red cross you see here (and a huge OMG).

The correct phrasing should really be:

“When the price decreases, the Quantity Demanded increases”

and 

“When the Quantity Demanded Demand decreases, the price will drop”

The differences in interpretations could not be more stark!

Price determines the “Quantity Demanded”, given the “Demand”

If you have had an understanding that differed from this statement, I hope this post clears things up.

If you have not understood any parts of this post, feel free to leave a comment below, and I will get back to you!

For more information about my services as a JC Economics tutor, do visit my website here.

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