Write the meaning of Demand. |
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| Ans : In common sense demand means desire for something. But in economics, demand is not merely desire demand means desire for goods and services which should be backed by ability to pay and willingness to pay.
Demand = Desire + ability to pay + willingness to pay
Therefore both willingness to pay and ability to pay are essential to convert desire into demand. In the absence of one component human desire cannot be demand. For example, A man wants to buy a bike but if he don’t have ability to pay but he is willing to pay, his desire cannot be converted into demand. On the other hand, a rich businessman desire to purchase a car is demand as he is able to pay and willing to pay for it.
According to Professor Marshall, “Demand refers to the quantities of a commodity that the consumer are able and willing to buy at each possible price during a given period of time, other things being equal.”
From the above definition and concept, it is clear that demand is desire for goods and services that should be backed by:
:-Ability to pay
:-Willing to pay
:-Price of the commodity
:-Particular period of time and place
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