able to purchase at each price. Demand is fundamentally based on needs and wants—if you have no need or

want for something, you won't buy it. While a consumer may be able to differentiate between a need and a

want, from an economist’s perspective they are the same thing. Demand is also based on ability to pay. If you

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3.1 • Demand, Supply, and Equilibrium in Markets for Goods and Services 49

cannot pay for it, you have no effective demand. By this definition, a person who does not have a drivers

license has no effective demand for a car.

What a buyer pays for a unit of the specific good or service is called price. The total number of units that

consumers would purchase at that price is called the quantity demanded. A rise in price of a good or service

almost always decreases the quantity demanded of that good or service. Conversely, a fall in price will increase
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