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How can you calculate market demand?

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Quick Answer

Market demand can be calculated by estimating consumer demand based on the sales history of a business, the Bureau of Labor Statistics Consumer Expenditure Survey and a bussinessowner's own consumer survey, according to the Houston Chronicle. The choice of method depends upon which market demand is being measured.

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Full Answer

The Houston Chronicle lists three steps to calculating market demand. The first step measures market demand for a specific products in a specific region. This is accomplished by taking the monthly sales history from a specific business. For example, if a store sells $3,000 in books monthly, the monthly demand for books at that store is $3,000. The next step is to gain a picture of national demand, using the Bureau of Labor Statistics Consumer Expenditure Survey. The survey lists expenditure tables that break down demand by demographics, including age, income and place of residence. To calculate demand, the value of a specific item is multiplied by the number of people in the relevant demographic. The third step is for a business owner to conduct his own survey. This can be achieved by interviewing customers and potential buyers in the region where the business conducts operations. Following these three steps offers a local, regional and national calculation of market demand.

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