What is Demand in Economics - INDJOBSGROUP

Sunday, September 15, 2019

What is Demand in Economics

What is Demand in Economics

In common parlance, the words' desire 'and demand' are used interchangeably.  But in economic literature they have different connotations.  While 'feeling the absence of some want' is called 'desire', 'demand' means 'desire backed 6by ability and willingness to pay'.  As such effective desire 'is called' demand 'in economics. There is a saying, if wishes were horses, beggars could ride them '.  This statement amply explains the meaning of demand in economics.  When a beggar wishes to ride a horse, his desire is not regarded as demand in economics.  This is so because the beggar simply wishes to ride a horse, but he does not have the ability or the money needed to hire or buy horse.  Therefore, his desire is simply a wishful thinking, having no relevance in the horse market.  Moreover, even if the beggar acquires the ability to pay for the horse, his desire to ride a horse will not be fulfilled unless he is prepared to part with the money needed to buy the horse.  Since the beggar has many unfulfilled desires which are more urgent and important, he may be prepared to spend his limited money to satisfy his urgent and important wants like want for food and medicine rather than utilizing it for buying a horse.  Therefore his desire for riding a horse simply remains an imaginary feeling and is not translated into action due to lack of ability and willingness to pay.  As such in economics demand means effective desire which is supported by ability and willingness to pay for the desired good or service.  Moreover,

demand is always at a price.  If the price of the commodity is not known to the consumer his demand for it may not be executed in the market.  Only when the price at which the commodity is offered for sale in the market is accepted by the consumer, at that point of time he purchases it and satisfies his want.  Therefore, Prof Bobber has rightly defined demand as "the various quantities of a given commodity or service which consumers would buy in a market in a given period of time a various prices." In other words, "demand in economics means the quantity of a commodity  that consumers wish to purchase in the market in a given period of time and at a given price ".  

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