DEMAND SPACE:

The area on or beneath a demand curve that indicates all possible price-quantity combinations acceptable to buyers. Buyers are willing and able to purchase any price-quantity combination that places them on or below the demand curve, but not above.

Demand space includes all combinations of price and quantity demanded that are acceptable to buyers. It includes every price up to the maximum demand price for a given quantity demanded. Alternatively, it includes every quantity up to the maximum quantity demanded for a given demand price.

Show Me The Space

Demand Space

The exhibit at the right illustrates the demand space for stuffed Yellow Tarantulas, a cute and cuddly stuffed creature from the Wacky Willy Stuffed Amigos line of collectibles. Demand space is the highlighted area below (and including) the demand curve. This space contains all price-quantity combinations acceptable to buyers.

More Than A Curve

While the demand side of the market is usually represented by a demand curve, the buying process is often best reflected by the entire demand space. Buyers can operate anywhere within this space. It could be on the demand curve itself or far below the line.

The demand curve actually only represents the upper boundary of the willingness and ability to buy. Invoking the observation that people prefer more to less means that the demand price on the demand curve is the highest price, the maximum price, that buyers are willing and able to pay. However, buyers are also willing and able to pay less than the demand price for a given quantity. In fact, the lower the better.

Suppose, for example, that buyers are faced with purchasing 40 Yellow Tarantulas. They are willing and able to pay $30 each, the demand price on the demand curve. Lower prices, however, are also acceptable. Is $20 each acceptable? Certainly. How about $10? No question. Are buyers willing and able to pay as little as $0? Without a doubt. All of these prices place the buyers in the demand space.

<= DEMAND SHOCK

DEPOSIT EXPANSION MULTIPLIER =>

DEMAND SPACE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: May 24, 2022].

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     | market demand | competition | value | consumer sovereignty | competitive market | efficiency | income effect | substitution effect | consumer demand theory | utility analysis | diamond-water paradox | total utility | marginal utility |

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