Definition of demand
Concept/definition
In ordinary language demand is desire to have a commodity. But in economics mere desire to have a commodity is not considered as demand.
In economics demand is defined as' A desire backed by ability and willingness to pay". From the above definition the following conditions are derived for demand.
1) The person must have the desire to have the commodity.
2) The person must have sufficient purchasing power or economic ability to buy,the commodity.
3) He must be willing to pay for the commodity.
4) He must be prepared to pay the existing price of the commodity.
In short,
Demand=Demand+Economic ability to buy+willingness to pay+readiness to pay the existing price.
Demand is a relative term:
Demand depends upon many factors. Price is an important factor determining demand. A demand statement must have the reference of price & time. Observe the following. Statements.
1)Demand for pen is 1000 units.
2)Demand for pen is 1000 units per day.
3)Demand for pen is 1000 units per day at,price Rs.5 per unit.
The first statement does not have the reference of price and time, so it makes no sense. The second statement has the reference of time but not price, so it not a complete statement. The third statement has the reference of both price and time and so it is a perfect and complete statement. The demand statement must always have the reference of price and, time. As demand is related to price and time, we say that demand is a relative term.
In ordinary language demand is desire to have a commodity. But in economics mere desire to have a commodity is not considered as demand.
In economics demand is defined as' A desire backed by ability and willingness to pay". From the above definition the following conditions are derived for demand.
1) The person must have the desire to have the commodity.
2) The person must have sufficient purchasing power or economic ability to buy,the commodity.
3) He must be willing to pay for the commodity.
4) He must be prepared to pay the existing price of the commodity.
In short,
Demand=Demand+Economic ability to buy+willingness to pay+readiness to pay the existing price.
Demand is a relative term:
Demand depends upon many factors. Price is an important factor determining demand. A demand statement must have the reference of price & time. Observe the following. Statements.
1)Demand for pen is 1000 units.
2)Demand for pen is 1000 units per day.
3)Demand for pen is 1000 units per day at,price Rs.5 per unit.
The first statement does not have the reference of price and time, so it makes no sense. The second statement has the reference of time but not price, so it not a complete statement. The third statement has the reference of both price and time and so it is a perfect and complete statement. The demand statement must always have the reference of price and, time. As demand is related to price and time, we say that demand is a relative term.
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