Economics: Demand: Meaning, Definition and Difference Between Demand and Desire

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Meaning

Demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given period of time.

Definition

Demand for a good is defined as the quantity of the good purchased at a given price at given time.

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.

  • Ex. Mahi purchased 2 Kg of mangoes it is demand but if she could not pay for the same it becomes a desire.

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

Factors Affecting Individual Demand

Factors Affecting Individual Demand

Price of the Commodity

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. Related goods can be of two types : (a) substitute goods (b) complementary goods.

  • Substitute goods are those goods which can easily be used in place of each other. The demand for a commodity is directly related to the price of its substitute goods.

  • Complementary goods are those goods which are used together in satisfying a particular want. 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. 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.

  • But there are some goods whose demand decreases when income of the buyer increases, such as jowar this is an inferior good, the demand for inferior goods is inversely related to the income of the buyer.

Taste, Preferences and Fashion

Tastes, preference and fashion are important factors which affect the demand for a commodity. The demand for those goods increases which are preferred by the buyer or which are in fashion. On the other hand, demand for those goods decreases which are not preferred by the buyer or which are out of fashion.

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