Understanding market demand and market demand curves is essential if you want to sell products online. After all, a product has to be in demand to some degree if you want to make sales. Market demand also plays an important role in helping you decide on a particular product, market niche, or price point.
The market demand curve is an essential aspect of selling products whether you’re opening a brick-and-mortar store or an online store. The market demand curve is a visual representation of the relationship between the price and demand of a particular good, giving you an idea of the demand of a good, the elasticity of demand, price elasticity, and the supply curve. Want to learn more about market forecasting and market demand? Keep reading.
What is market demand?
Successful businesses require 2 things: people who want what you sell, and people who are willing to pay for it. In essence, that's market demand.
Think of it this way: Before you set up a lemonade stand, it's good to know how likely your neighbors are to buy your product, as well as how much they're willing to pay. This prevents you from spending money on lemons, only to learn that they'd rather have soda.
Market demand curve definition
The market demand curve is a graph that shows the relationship between the price of a product and the demand for that particular product. The price is typically shown on the Y axis of the graph while the demand is shown on the X axis. As you move to the right side of the graph, demand tends to increase and price tends to decrease. As you move toward the upper-left side of the graph, prices are higher but demand is typically lower. This is known as the law of demand: The higher the price of a particular good, the lower the demand.