Meaning and Definition of Demand
Demand for goods and services implies the number of goods and services that buyers are wanting or willing and capable to acquire at various potential prices during a particular time. In common sense, demand implies a desire or wish to have something or some goods or services. But in economics, the term demand has a specific meaning, and it is a strong desire that is supported by or backed up by money or resources. To be a desire a demand, the consumer should have money to purchase and readiness to pay for the goods. Therefore, demand can be defined as a desire supported by an ability to pay and willingness to pay for goods within a given period.
Demand indicates both the desire/aspiration to acquire or procure/buy and the capability/power to pay for a commodity. It is only when desire is backed up by the willingness and power to pay for that give rise to the demand. So, demand is an effective desire, i.e., a desire accompanied by the willingness to buy and the power to purchase. You may have a desire for Lamborghini, but it will become demand only when you have adequate money, and you are willing to spend that money to purchase that car.
Demand in economics is always at a price. It does not make any sense or meaning if the demand is not related to a price. For example, you may be willing to buy a bag if it is available for $100, but you may not buy it at all I the bag is priced at $145. Furthermore, various amounts of a commodity will be demanded at various prices. Thus, demand is always expressed concerning a particular price.
Similarly, demand is always expressed regarding time. For instance, demand for a car will be quite different if the period in question is one day, one week, or one year. Demand is a flow concept and flow is any variable that is expressed per unit of time. So, we express demand as so much per period. For example, 300 cars per day or 2100 cars per week, or 109,500 cars per year. Thus, demand does not refer to a single isolated purchase, rather it refers to a continuous flow of purchases.
If you say that the demand for a car is 300, then it will be an incomplete expression. The term demand is meaningless without reference to the price and time. Demand makes complete sense only when we refer it to some price and the time.
Demand versus Desire
A desire is a wish of having something. A desire itself cannot be a demand. For a layman demand and desires may be similar concepts but in economics, demand implies more than mere desire. Desire is just a wish to have anything whereas demand is the desire backed up by readiness and power to buy. To conclude, demand is the quantity of a commodity that is purchased at varying or certain prices, income, etc. within the given time in a market.
Following are the major differences between demand and desire.
|It is the desire or wants to be backed up by ability and willingness to pay.||It is simply a human want.|
|It is limited.||It is unlimited.|
|Demand is all the time for the items accessible in the market.||Desire may be for indefinable, intangible, and imaginary things too.|
|It has a market value.||there may or may not be a market value of desire.|
|Ability and willingness to pay are mandatory.||In case of desire, the capability or power and readiness to pay are not compulsory.|
|It is expressed concerning price and time duration.||Desire has nothing to do with time and price.|
|A demand may be fulfilled.||A desire may not be accomplished.|