Economics JAIBB Part 1

What is Demand?
The demand for any commodity at a given price is the quantity of it which will be bought per unit of time at that price.
Elements of Demand: According to the definition of demand here are three elements of demand for a commodity:-
(i) There should be a desire for a commodity.
(ii) The consumer should have money to fulfill that desire.
(iii) The consumer should be ready to spend money on that commodity.
Thus we can define demand as the desire to buy a commodity which is backed by sufficient purchasing power and a willingness to spend.
What are the Determinants of Demand?
Ans.: There are many economic, social and political factors which greatly influence the demand for a commodity. Some of these factors are discussed below:
(1) Price of the Commodity
(2) Price of Related Goods
(i) Complementary Goods
(ii) Substitute Goods
(3) Level of Income and Wealth of the Consumer
(i) Necessaries
(ii) Inferior goods
(iii) Luxuries
(4) Tastes and Preference
(5) Government Policy
(6) Other Factors:
(i) Size and Composition of Population
(ii) Distribution of Income and Wealth
(iii) Economic Fluctuations What is the Law of Demand? The law of demand states that, other things being equal, the demand for a good increase with a decrease in price and decreases in demand with an increase in price. The term other things being equal implies the prices of related goods, income of the consumers, their tastes and preferences etc. remain constant.