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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.
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship.Supply represents how much the market can offer.he higher the price of a good the lower the quantity demanded (A), and the lower the price, the more the good will be in demand (C). B. The Law of Supply. Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price.