What does demand in economics refer to?

Demand in economics refers to the relationship between the price of a good or service and the quantity that consumers are willing and able to purchase at that price. This concept emphasizes that demand is not just about the desire to own something; it also incorporates the consumer's ability to pay for that product. As prices fluctuate, the quantity demanded typically changes, establishing a fundamental understanding of market behavior.

By recognizing this relationship, businesses and economists can predict how changes in price will impact consumer purchasing patterns, helping them to make informed decisions in production, marketing, and pricing strategies. Other options focus on supply and production costs, which are crucial aspects of market dynamics but do not accurately encapsulate the specific definition of demand in this context.