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Saturday, 19 May 2018

Definition of demand in economics





In economics when a person desires to buy something , has adequate purchasing power with willingness to spend is called demand.

One must not confuse that when a person thinks for buy something is called demand.

E.g. if a person has adequate money and wants to purchase a bike but he is not willing to spend money then it is not called demand. Thus three conditions must be specified to constitute demand.

The three conditions are-

1. Sufficient money
2. Desire to buy something.
3. Willingness to spend money.


Note:-

1. If you have Rs 1000 and want to purchase apples price Rs 100 per kg than you can purchase 10kg apples. If price of apple reduces to Rs 50 per kg then you can purchase now 20kg apples from same amount. It will be considered as increase in purchasing power . Purchasing power is also known as real money.

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