Wires carrying current always have inherent resistance, or impedance, to current flow. Voltage drop is defined as the amount of voltage loss that occurs through all or part of a circuit due to impedance.
A common analogy used to explain voltage, current and voltage drop is a garden hose. Voltage is analogous to the water pressure supplied to the hose. Current is analogous to the water flowing through the hose. And the inherent resistance of the hose is determined by the type and size of the hose - just like the type and size of an electrical wire determines its resistance.
Excessive voltage drop in a circuit can cause lights to flicker or burn dimly, heaters to heat poorly, and motors to run hotter than normal and burn out. This condition causes the load to work harder with less voltage pushing the current.
The National Electrical Code recommends limiting the voltage drop from the breaker box to the farthest outlet for power, heating, or lighting to 3 percent of the circuit voltage. This is done by selecting the right size of wire and is covered in more detail under "Voltage Drop Tables."
If the circuit voltage is 115 volts, then 3 percent of 115 volts is 3.5 volts. This means that voltage lost from the wires in the circuit should not exceed 3.5 volts and the outlet should still have 115 - 3.5 or 111.5 volts to supply. Since most appliances require an extension cord to plug into an outlet, some voltage drop will occur in the extension cord as well. Some motors will not run correctly, and could even burn up, if the voltage at the motor falls too low.