Definition (Meaning) of DemandFitness Gear & Equipment
Definition (Meaning) of Demand
Demand means the quantity of a commodity demanded per unit of time at a certain price.
Types of Demand, (a) Price demand means the quantity demanded at a certain price.
(b) Income Demand means the quantities demanded at the various levels of income.
(c) Cross Demand denotes the quantities demanded with reference to a change in price of some other goods.
Everybody knows that demand depends on price. Demand is always at a price. At different prices different quantities will be purchased. From the connection between demand and price we are able to enunciate a principle which is known as the 'Law of Demand'. The Law of Demand says that Demand varies inversely with price, not necessarily proportionately. It means that if the price falls demand will increase, and vice versa.
If there is a change in fashion, custom or season, the demand may change even though the price has not changed. In such cases, the conditions of demand have altered. A change in population or change in the amount of currency in circulation or change in real income or change in the distribution of wealth are also some of the factors which influence demand independently of price.
From the law of demand we notice that whenever there is a change in price, it is followed by a change in demand. As price increases, demand decreases, and vice versa. Different quantities will be purchased at different prices. If we put down different quantities that will be demanded at different prices, we get what is called a demand schedule. Demand schedule is simply a statement in the form of a table giving against each price the quantity of the commodity that will be demanded for a given period of time.
There are several factors which cause change in demand, e.g., changes in weather, fashion, tastes, change in population, in wealth distribution and a change in real income. But in constructing a demand schedule we do not take any notice of these influences. On the other hand, we single out only one influence, viz., the price. Thus, a demand schedule is prepared by taking note of changes of demand consequent on changes in price.
The individual demand schedule is not of very great practical importance. It is the market schedule which is of great value. The market demand schedule can be prepared by putting down against each price the total quantity of commodity which will be disposed of at that price in the whole market.
Another thing about the demand schedule worth remembering is that it is all imaginary. We can never prepare an actual demand schedule. We know the quantity demanded at the price prevailing at the moment. All other prices and commodities have to be written down from imagination. We cannot even take guidance from any past record, because now the conditions may be far different; history in this case may not repeat itself.
To prepare the actual demand schedule of an individual is a very difficult affair and to prepare one for the whole market is a sheer impossibility. It is not always easy for a person to be able to say how much he would buy at different prices. Further, demand schedule is not something absolute, as the utilities of different commodities are inter-dependent.
But this is not to say that the demand schedule, as such, is of no use. Rough and ready as it is, it has a great practical utility. A Minister of Finance has to estimate to what extent the people will reduce their purchases of goods when the imposition of a tax has raised their price. The preparation of the budget would be impossible without such calculations. The monopolist, too, has to consider consumers' reactions to the variations in prices in order to maximize his profit.