Demand and Supply

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Darcio Mataczyno
Darcio Mataczyno's picture
Demand and Supply

Hello,

I had a question in my quiz :What is effective demand?

I didn't know the question.

looking forward of hearing your answer.

Jason Pride
Jason Pride's picture

Hi Darcio,

Effective demand is the amount of goods or services that consumers are willing and able to purchase at a given price. This differs from demand in that demand is the amount of goods or services consumers are willing to buy at a given price. Effective demand ignores that group of consumers who are willing but unable to purchase at a given price. For example, many consumers may be willing to purchase a new home for $1 million. Unfortunately, only a small number are actually able to do this.