Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is the concept of demand?

1. The quantity of goods available

2. The total sales revenue

3. The consumer's desire for goods or services

4. The manufacturing cost of goods

The correct answer is: The consumer's desire for goods or services

The concept of demand in economics refers to the consumer's desire for goods or services, coupled with the willingness and ability to purchase them. It reflects not just the desire to own something but also the practical aspect of being able to buy it at a given price. Demand is typically represented through a demand curve, which illustrates the relationship between price and quantity demanded. Understanding demand is crucial because it helps determine how much of a product consumers want to buy at various price levels, influencing production and pricing strategies for businesses. Unlike the other options, which relate to different economic concepts—such as supply for the quantity of goods available, revenue for total sales revenue, and production for manufacturing costs—this option directly addresses the consumer's perspective and market behavior, which are fundamental to the theory of demand.