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Effective demand is the term economists use to refer to the actual demand that exists in a market. In other words, effective demand exists when a buyer has both the desire and the ability to buy a product. So the effective demand for sports cars might be measured by the actual number of sports cars sold at a certain price during a particular period.
The following article provides an overview of supply and demand in general and explains the differences between demand and supply curves. Demand Curve. Demand is defined as the desire to purchase goods and services backed by the ability and willingness to pay a price. The law of demand is an important concept in economics that looks at the relationship between the price and quantity demanded.