Demand: Meaning of Demand and Difference between Demand and Desire (For CBSE, ICSE, IAS, NET, NRA 2022)

Doorsteptutor material for CBSE/Class-9 is prepared by world's top subject experts: get questions, notes, tests, video lectures and more- for all subjects of CBSE/Class-9.

Meaning of Demand

  • Demand for a good is defined as the quantity of the good purchased at a given price at given time.
  • We can express the above-mentioned examples to show the different components of demand as follows:
Meaning of Demand
SI. No.Name of GoodPrice

(₹ Per kg.)

Quantity

(Kg.)

Time period
1Rice252Last week
2Wheat353Do
3Oranges782Do

Thus, the definition of demand includes three components:

  • Price of the commodity
  • Quantity of the commodity bought
  • Time period.

Note that time period may vary. This can be week, month, year etc.

Difference between Demand and Desire

  • Demand is desire backed by ability to purchase. This means that if somebody desires to have a good, he/she can demand it if he/she has the money to purchase it by paying its price. Anyone can desire any good or service. But just by desiring something, one cannot have it without paying the price. Once the price is paid by the person who has desired it, only then it becomes the demand for the good by that person.
  • Example given above once again- “Ramu purchased 2 kg of Oranges at ₹ 78 per kg last week.” This is the demand for mangoes by Varsha. Had Ramu desired to have mangoes but could not pay the price to buy, then it would have been said as ramu՚s desire but not demand for mangoes.

Factors Affecting Individual Demand

Individual demand refers to the quantity of a commodity that an individual buyer is willing to buy at given price per unit of time. But how much quantity of a commodity one is willing to buy depends upon the following factors. These are also called determinants of demand.

These are:

Price of the Commodity

commodity is defined as a tangible good that can be bought and sold or exchanged for products of similar value. When you visit a market to buy a commodity, you go to a seller of that commodity and ask for its price first. If you think that the price is reasonable, you buy the required quantity of the commodity. On the other hand, if the price is higher in your opinion, you may not buy or buy less quantity of it. Generally, we are willing to buy more quantity of a commodity at a lower price and less of it at a higher price, if all other factors determining demand remain constant.

Price of Related Goods

The demand for a commodity is also influenced by the prices of its related goods.

Price of Related Goods

Related goods can be of two types:

Substitute Goods

  • Substitute goods are those goods which can easily be used in place of each other.
  • Example substitute goods are coke and Pepsi, tea and coffee etc.
  • If price of coffee increases, people will demand more of tea and thus demand for tea will increase. If price of coffee falls, people will demand more of coffee and thus demand for tea will fall. So, the demand for a commodity is directly related to the price of its substitute goods.

Complementary Goods

  • complementary goods are those goods which are used together in satisfying a particular want.
  • Examples -complementary goods are car and petrol, ball pen and refill etc.
  • If we have a car, we also require petrol to run it. Demand for car will decrease. If the price of one of them increases, the demand for other good will decrease and if price of one of them falls, the demand for the other will increase. So, the demand for a commodity is inversely related to the price of its complementary goods.

Income of the Buyer

The demand for a commodity also depends on the income of the buyer. When your income increases, you are likely to spend more on purchase of some goods such as fruits, full cream milk, butter etc. Such goods are normal goods. Normal goods are those goods whose demand increases with the increase in income. So, the demand for normal goods is directly related to the income of the buyer. some goods whose demand decreases when income of the buyer increases, such as jowar, bajra, toned milk etc.

Tastes, Preferences and Fashion

Tastes, preference and fashion are important factors which affect the demand for a commodity. if Raju prefers jeans and T- shirt in comparison to Formal attire , his demand for jeans and T- shirt will increase. So, demand for those goods increases which are preferred by the buyer or which are in fashion.

Individual Demand Schedule

Every individual demands some goods and services for the satisfaction of his/her wants. In the example given earlier we talked about Ramu՚s demand for rice, wheat and oranges for a week. Ramu՚s purchases will not stop there. he will again purchase these items whenever he needs them. Whether he will buy the same quantity or not next time when he goes to the market depends on whether the price of the goods have remained same or not.

Developed by: