Meanings
and Definition of Demand:
The word
'demand' is so common and familiar with every one of us that it seems
superfluous to define it. The need for precise definition arises simply because
it is sometimes confused with other words such as desire, wish, want, etc.
Demand in
economics means a desire to possess a good supported by willingness and ability
to pay for it. If your have a desire to buy a certain commodity, say a car, but
you do not have the adequate means to pay for it, it will simply be a wish, a
desire or a want and not demand.
Demand is an effective desire, i.e., a desire which is backed by willingness and
ability to pay for a commodity in order to obtain it. In the words of Prof. Hibdon:
"Demand means
the various quantities of goods that would be purchased per time period at
different prices in a given market".
Characteristics of Demand:
There are
thus three main characteristic's of demand in economics.
(i)
Willingness and ability to pay. Demand is the amount of a commodity for
which a consumer has the willingness and also the ability to buy.
(ii) Demand is
always at a price. If we talk of demand without reference to price, it will
be meaningless. The consumer must know both the price and the commodity. He
will then be able to tell the quantity demanded by him.
(iii) Demand is
always per unit of time. The time may be a day, a week, a month, or a
year.
Example:
For instance, when the milk is
selling at the rate of $15.0 per liter, the demand of a buyer
for milk is 10 liters a day. If we do not mention the period of
time, nobody can guess as to how much milk we consume? It is
just possible we may be consuming ten liters of milk a week, a
month or a year.
Summing up, we can say that
by demand is meant the amount of the commodity that buyers are
able and willing to purchase at any given price over some given
period of time. Demand is also described as a schedule of how
much a good people will purchase at any price during a specified
period of time.
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