In this article we will discuss about the definition of demand for a good.
In ordinary language, demand for a good means the desire to have the good. For example, if a person desires to have an automobile, it is said that he has demand for an automobile. However, in economics, mere desire to have a good is not taken to be the demand for that good.
In economics, demand is desire backed by purchasing power. For example, if the person has the desire to possess something, say, an automobile, without the necessary purchasing power, then he cannot buy the thing, i.e., he cannot effectively demand it.
But the definition of demand is not complete unless it mention how it keeps account of the demand for a good. For example, if it simply say that the demand for a good is 500 units, our idea of the amount demanded would not be clear or complete.
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Along with mentioning the quantity of 500 units, it have also to mention:
(i) At what price of the good, the quantity demanded (qd) is 500 units, for qd may be different at different prices, and
(ii) The period during which qd is 500 units, for qd per day may be different from qd per week or qd per month, and
(iii) Over what area qd is 500 units, for qd of the good in a town would be different from that in a whole district.
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Therefore, a complete statement on the demand for a good, as per definition, would be like this: at the price of p (say, Rs 10), the demand for a good is q (say, 500 units) per period (say, per day) in a particular area (say, in a particular town).
What this statement really means is that at price p, quantity q of the good is bought per period, i.e., quantity q of the good can be sold per period at price p.
It is to be noted here that it shall assume throughout our analysis that demand for a good is a single-valued function of its price, which implies that at a particular price of the good, the quantity demanded of it may assume one and only one value, i.e., there is a one-to-one correspondence between price and quantity.
When a demand statement is made, it is assumed that the determinants of demand other than the price of the good remain unchanged.
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These other determinants of demand—or “other things” as they are generally called—are tastes, habits, and preferences of the buyers, the income of the buyers, prices of the substitute and complementary (i.e., related) goods, population size in the area concerned, etc.
These “other things” are assumed to remain constant, because, if they do not, then, at the same price, the demand for a good may assume different values depending on the values of these “other things”. In other words, if the other things do not remain constant, then demand for a good cannot be considered as a single-valued function of its price.