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Trading and Investment Terminology

Quantity Demanded

Quantity demanded is the total amount of a goods or services that required by consumers over a given specific of time. Quantity demanded relies upon the price of a good, whether the market is in equilibrium or not.

 

The relation between quantity demanded and price can be shown on a graph called the demand curve. A demand curve is a graphical representation of a demand schedule which shows the relation between price and quantity demanded in a tabular format.

 

Now that we have cleared that quantity demanded is affected by the price of a good, let us understand the relation between them. There is an negative relation between quantity demanded and price. This means when the price rises, the quantity demanded falls and when price falls quantity demanded rises. This is how the law of demand works.

 

A change in quantity demanded occurs when there is and increase or decrease in the specific quantity of a product due to a change in its price.

 

Elasticity of demand is the term used to describe the degree to which quantity demanded changes due to a change in the price.

 

If the elasticity for quantity demanded is highly elastic then quantity demanded can vary widely due to a change in the product price. If the elasticity for quantity demanded is highly inelastic then the quantity demanded remains static even after a price change.

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