What Is Quantity Demanded? Definition and Examples
By Markets & Investing DeskUpdated Nov 10, 2026
Definition
Quantity demanded is the amount of a good buyers are willing and able to purchase at one specific price over a set period, with all other influences on buying held constant.
Key takeaways
- The law of demand says a higher price lowers quantity demanded and a lower price raises it, other factors constant.
- A price change moves buyers along the demand curve, while income or taste changes shift the whole curve.
- In the café example Qd = 100 - 10P, raising the price from $4 to $5 cuts sales from 60 to 50 cups.
- With elasticity near -0.82, the café's price increase lifts revenue from $240 to $250 despite fewer cups sold.
Quantity demanded is the specific amount of a good or service that buyers are willing and able to purchase at one particular price, over a defined period, with every other influence on buying held constant. It is a single number tied to a single price: “60 cups of coffee per day at $4 a cup” is a quantity demanded. Change the price and you get a different quantity demanded. Change something other than price, such as income or tastes, and the whole demand relationship moves.
How Quantity Demanded Works
The law of demand
The law of demand states that, holding other factors constant (the ceteris paribus assumption), a higher price lowers the quantity demanded and a lower price raises it.
Two standard mechanisms explain why:
- Substitution effect: when a good becomes more expensive relative to alternatives, some buyers switch to those alternatives.
- Income effect: a higher price reduces what a fixed budget can buy, so buyers can afford fewer units.
The quantity demanded formula
In general form, quantity demanded is written as a function of price:
Qd = f(P)
Economists often use a linear version for teaching and simple modeling:
Qd = a - bP
where a is the quantity buyers would want if the price were zero, b is how many units quantity demanded falls for each $1 increase in price, and P is the price. The values of a and b already reflect income, preferences, prices of related goods and other conditions; if any of those change, the equation itself changes.
Interpreting a demand curve
On a standard demand graph, price sits on the vertical (y) axis and quantity on the horizontal (x) axis. Connecting each price and quantity demanded pair produces a downward-sloping demand curve. A price increase moves the point up and to the left; a price cut moves it down and to the right.
Example of Quantity Demanded
Hypothetical example: a café estimates that daily demand for its coffee follows Qd = 100 - 10P.
| Price per cup | Calculation | Quantity demanded (cups/day) |
|---|---|---|
| $3 | 100 - 10(3) | 70 |
| $4 | 100 - 10(4) | 60 |
| $5 | 100 - 10(5) | 50 |
This table is a demand schedule: a list of prices in ascending or descending order next to the quantity demanded at each one. Plotting its rows gives the demand curve.
If the café raises its price from $4 to $5, quantity demanded falls from 60 to 50 cups. That is a decrease in quantity demanded, a movement along the same curve. If a new office building opens next door and the café now sells more at every price, say Qd = 130 - 10P, demand has increased: at $4, quantity demanded is now 90 cups. The curve has shifted right.
Market quantity demanded
Market quantity demanded is the sum of every buyer’s quantity demanded at a given price. If, at $4, buyer A wants 2 cups, buyer B wants 1 and buyer C wants 3, market quantity demanded at $4 is 6 cups. Repeating the sum at each price builds the market demand schedule, and graphically this is a horizontal sum of the individual demand curves.
Change in Demand vs. Change in Quantity Demanded
| Change in quantity demanded | Change in demand | |
|---|---|---|
| Cause | The good’s own price changes | A non-price factor changes |
| On the graph | Movement along the existing curve | The entire curve shifts left or right |
| Example | Coffee rises from $4 to $5, cups sold fall | Incomes rise, more cups wanted at every price |
Demand is the whole relationship between price and quantity, the full schedule or curve; quantity demanded is one point on it. An “increase in Qd” always means a lower price on the same curve, while an “increase in demand” means buyers want more at every price.
Factors that shift demand
These non-price factors change demand itself, and therefore the quantity demanded at every price:
- Consumer income: for normal goods, higher income raises demand; for inferior goods, it lowers it.
- Prices of related goods: a pricier substitute raises demand for this good; a pricier complement lowers it.
- Tastes and preferences: if buyers move from gasoline cars to electric cars, the demand curve for gasoline cars shifts left.
- Expectations: an expected future price rise can increase demand today.
- Number of buyers: more buyers in the market raises market demand.
Price Elasticity of Demand
Elasticity measures how much quantity demanded responds to a price change:
Price elasticity of demand = % change in quantity demanded ÷ % change in price
Using the café example with the midpoint method (percentage changes measured against the average of the old and new values):
- % change in quantity: (50 - 60) ÷ 55 ≈ -18.2%
- % change in price: (5 - 4) ÷ 4.5 ≈ 22.2%
- Elasticity ≈ -0.82
Because the absolute value is below 1, demand is inelastic over this range: quantity demanded falls proportionally less than price rises, so the café’s revenue (price × quantity) goes up, from $240 to $250. If the absolute value were above 1, demand would be elastic, and a price increase would reduce revenue.
Goods with few substitutes, such as insulin for people who depend on it, tend to show very inelastic demand: quantity demanded barely changes as price changes. Goods with many close substitutes tend to be more elastic. Note that on a straight-line demand curve the slope is constant but elasticity is not; it differs at each point along the line.
Why Quantity Demanded Matters
Businesses use quantity demanded estimates to set prices, forecast sales and plan inventory. Policymakers use them to predict how a tax, subsidy or price control will change consumption; a tax that raises the price of cigarettes, for instance, is expected to reduce the quantity demanded. Combined with quantity supplied, quantity demanded determines market equilibrium: the price at which the amount buyers want equals the amount sellers offer. Above that price there is a surplus; below it, a shortage.
Limitations
The ceteris paribus assumption rarely holds in real data. Prices and non-price factors often change at the same time, so separating a movement along the curve from a shift of the curve requires careful analysis, not just observing that price and sales moved together.
Nominal vs. real prices. During periods of general price increases, a product’s sticker price can rise without its price rising relative to incomes and other goods. Comparing quantity demanded across years usually calls for adjusting prices with a measure such as the Consumer Price Index.
Exceptions to the law of demand. Economists describe cases where quantity demanded can rise with price. A Giffen good is a staple inferior good whose price increase forces low-income buyers to cut other foods and buy more of the staple. A Veblen good is a luxury item whose high price is part of its appeal.
Equations are estimates. A formula like Qd = 100 - 10P is a model fitted to a range of observed prices. Extrapolating it far outside that range, for example to a price near zero, can give unrealistic results.
FAQs
Is quantity demanded the same as the amount actually sold?
Not always. Quantity demanded is what buyers want at a price. If the price is held below equilibrium, buyers may want more than sellers provide, and the amount sold is limited by supply, leaving a shortage.
The Bottom Line
Quantity demanded matters to businesses setting prices and planning inventory, and to policymakers predicting how taxes or subsidies will change consumption. The key skill is separating a movement along the curve, caused by the good's own price, from a shift caused by non-price factors. Real data rarely hold other factors constant, so demand equations are estimates that need careful analysis and inflation-adjusted prices.
