Meaning of Demand


Meaning of Demand

Conceptually, the term ‘demand’ implies a ‘desire for a commodity backed by the ability and willingness to pay for it.’ The desire without adequate purchasing power and willingness to pay, do not affect the market, nor do they generate production activity. A want with three attributes – desire to buy, willingness to pay and ability to pay – become effecting demand. For example – if a man wants to buy a car but he does not have sufficient money to pay for it, his want is not his demand for the car.  If a rich miserly person wants to buy a car, but he is not willing to pay for it, his desire too is his demand for a car. But if a man has sufficient money and is willing to pay the price of the car, his desire to buy a car is an effective demand.

The term demand for a commodity always has a reference to ‘A Price’, ‘A Period of Time’, and ‘A Place’. Any statement regarding the demand for a commodity without reference to its price, time unit and place of demand is meaningless and is of no practical use. For instance, to say ‘ the demand for TV sets is 50000’, carries no meaning for a business decision, nor does it have any use in any kind of economic analysis. Instead of above statement, if we say, ‘ The annual demand for TV sets in Delhi at an average price of Rs. 15000, a piece is 50000’ is a meaningful statement. So we can say that a meaningful statement regarding the demand for a commodity should have to contain the following information –

1    1.    The quantity demanded of a commodity.
2.    The price at which a commodity is demanded.
3.    The time period over which commodity is demanded.
4.    The market area in which a commodity is demanded.

Location: Bathnaha, Bihar, India

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