Demand is an important concept in Economics. In ordinary usage, demand means desire of individuals to buy a commodity. But in Economics fit has a special meaning. Mere desire for a commodity is not considered demand in economics. A commodity is said to be demanded when the individuals have desire or willingness to buy and ability to buy the commodities. Broadly speaking, the term demand implies three elements, namely:
- desire for the commodity,
- willingness to purchase the commodity and,
- ability to purchase the commodity.
Hence the desire backed by purchasing power of money is known as demand in Economics.
Demand always refers to a particular
Demand has no meaning when the price of a commodity, place of its purchase and time are not mentioned. The reason is that demand changes with a change in price, place and time.
If any of the above elements are absent, we cannot say it a Demand. For example, if a person has desire for the commodity, willingness to purchase the commodity but does not have the ability to purchase the commodity, we cannot say it a demand in economics. Hence demand has special meaning and usage in economics.