<

Economics Form 5 Science

Chapter 1 : Theory of Demand and Supply

Definition of demand

             The theory of demand tries to explain the behavior of buyers as they struggle to maximize satisfaction from the available income. Demand is the quantity of goods and services that is bought by a consumer or consumers at a particular price over a given period of time. It is important to note that in economics, demand must be effective for it to be considered as demand else it is a desire or need.

 

Effective Demand: This means that · a consumer's desire for a good or service must be backed by his ability and willingness to pay for the good or service at a given period of time I. e. consumers must have the purchasing power and willingness to pay for the good or service. That is, demand is always based on "willingness and ability to pay "for a good and this is what makes it different from "desire, want or need". It is only then that demand for a good or service is effective in the market. Consequently, the definition of effective demand must mention quantity, price and time period.

Effective demand is the desire for a good or service backed by the ability and willingness to pay for the good or service at a given period of time.

                   For any definition or statement of demand to be complete, the quantity, the price, the time period and the place (market) must be mention the demand for palm oil in Limbe market is 10,000 litres per day at the price of 600 frs Per litres.

par Claude Foumtum
Back Next