MEANING OF DEMAND

MEANING OF DEMAND

The concept ‘demand’ refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time. It is to be noted that demand, in Economics, is something more than the desire to purchase, though desire is one element of it. A beggar, for instance, may desire food, but due to lack of means to purchase it, his demand is not euective. Thus, euective demand for a thing depends on (i) desire (ii) means to purchase and (iii) willingness to use those means for that purchase. Unless desire is backed by purchasing power or ability to pay, and willingness to pay, it does not constitute demand. Euective demand alone would figure in economic analysis and business decisions.

Two things are to be noted about the quantity demanded.

1. The quantity demanded is always expressed at a given price. At diuerent prices diuerent quantities of a commodity are generally demanded.

2. The quantity demanded is a flow. We are concerned not with a single isolated purchase, but with a continuous flow of purchases and we must therefore express demand as ‘so much per period of time’ i.e., one thousand dozens of oranges per day, seven thousand dozens of oranges per week and so on.

In short “By demand, we mean the various quantities of a given commodity or service which consumers would buy in one market during a given period of time, at various prices, or at various incomes, or at various prices of related goods”.