Meaning Of Demand
Demand for a good implies the desire of an individual to acquire the product. It also includes willingness and ability of ail individual to pay for the product. For example, a miser’s desire for and his ability to pay for a car is not demand, for he does not have the necessary will to pay for the car. Similarly, a poor person’s desire for· and his willingness to pay for a car is not demand because he lacks the necessary purchasing power. One can also imagine an individual, who possesses both the will and the purchasing power to pay for a good. But this purchasing power is not the demand for that good, this is because he does not have the desire to buy that product. Therefore, demand is successful when there are all the three factors: desire, willingness and ability. It should also be noted that demand for any goods or services has no meaning unless it is stated with reference to time, price, competing product, consumer’s incomes, tastes and preferences. This is because demand varies with fluctuations in these factors. For example, the demand for an Ambassador car in India is 40,000 is meaningless unless it is stated that this was the demand ·in 1976 when an Ambassador car’s price was around thirty thousand rupees. The price of the competing cars’ prices were around the same, a Bajaj scooter’s price was around five thousand rupees and petrol price was around three and a half rupees per litre. In 1977, the demand for Ambassador cars could be different if any of the above factors happened to be different. Furthermore, it should be noted that a product is defined with reference to its particular quality. If its quality changes it can be deemed as another product. Thus, the demand for any product is the desire, willingness and ability to buy the product with reference to a particular time and given values of variables on which it depends.
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