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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.
Independent Versus Dependent Demand. Independent demand refers to the demand of finished goods. Dependent demand refers to the demand for items that are subassemblies or component parts to be used in the production of finished goods. The amount of dependent demand is the function of the amount of independent demand.