In every day conservation people speak of demand and supply of a commodity. They use demand as desire for a commodity. But mere desire for a commodity is not demand in economics. It is the effective desire for a commodity which can be called as demand in Economics.
A desire becomes effective when it is backed by another two important factors viz. (1) ability to pay for the commodity and (ii) Willingness to pay for the commodity. If the consumer has no monetary ability to pay for the commodity, then desire cannot be demand.
As beggar’s desire to purchase a car is no demand because he has no ability to buy. That is why it is said that if wishes were horses beggars can rid” them. So a consumer must have the ability to purchase the commodity.
A consumer should not only have the ability to pay but also the willingness to pay. There are people who are misers, they desire a thing and have the ability to pay for it but they are not willing to pay for it. They think that others will purchase for them.
This cannot be called an effective demand in economics.
Therefore, according to Stonier and Hague,
“Demand in economics means demand backed up by enough money to pay for the goods demanded.”
The story of demand is not complete without reference to price. It is always at a price.
According to J. J. Hansen,
“By demand is meant the quantity of a commodity that will be bought at a particular price and not merely the desire for a thing.”
Therefore, the demand for a commodity depends on price. It has no meaning without reference to price. If we say demand for potato in Bhubaneswar is 50 quintals, it is meaningless. When it is said that demand for potato in Bhubaneswar market is 50 quintals when the price per kg of potato is Rs. 8/-, it becomes reasonable.
Further, demand is always at a particular point of time. It varies with the time period. A household’s demand for rice for a month is much more than a day. In the above example when we say that demand for potato in Bhubaneswar market is 50 quintals per day when the price for kg is Rs. 8/-, it gives us a complete meaning of demand.
Therefore, when one speaks of demand he means the following five elements.
(a) Desire for a commodity.
(b) Ability to purchase it.
(c) Willingness to purchase it.
(d) Price of the commodity.
(e) The time period in which demand is made.
In the words of Benham,
“The demand for anything at a given price is the amount of it, which will bought per unit of time at that price.”
In the words of Bober,
“By demand we mean the various quantities of a given commodity or service which consumers would buy in one market in a given period of time and given price.”
To sum up, by demand, we mean, the quantity of some commodity which an individual wishes to purchases in a given market, in a given period of time, at a given price. Mere desire for a commodity does not constitute demand for it.