Introduction & Defination to Demand Analysis
You have already studied the concept of utility in the previous chapter. Utility is the basis of demand. Utility may generate a desire or a need to have a particular commodity, but utility on its own cannot generate demand for the commodity. This chapter is an effort to analyse the concept of demand. Demand analysis is concerned with consumer behavior.
Meaning of Demand :
In ordinary language, demand means a desire. Desire means an urge to have something. In Economics, demand means a desire which is backed by willingness and ability to pay.
For example, if a person has the desire to purchase a television set but does not have the adequate purchasing power then it will be simply a desire and not a demand.
Thus, demand is an effective desire. All desires are not demand.
∴ Demand = Desire + willingness to purchase + Ability to pay.
Try this : Identify the concepts :
A poor person wants to have a car …… A rich person bought a car ……
Definition of Demand :
According to Benham, “the demand for anything at a given price is the amount of it, which will be bought per unit of time at that price.”
Thus, following are the features of demand :
1) Demand is a relative concept.
2) Demand is essentially expressed with reference to time and price.