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Economic Theory

showroom to buy his dream car but declines to buy, just because he does
not find his preferred color. Moreover, demand for a good is always
expressed in relation to a particular price and a particular time. Therefore,
we may define demand for a good as the amount of it, which will be

purchased per unit of time at a given price. According to F. Benham, “The
demand for anything at a given price is the amount of it which will be

bought per unit of time at that price.” Another good definition of demand,
given by Bober is – “the various quantities of a given commodity or
service which consumers would buy in one market in a given period of
time at various prices, or at various incomes, or at various prices of related

goods,” constitute demand.
Let us assume that the term demand is used to refer to the amount of
some good or service consumers are willing and able to purchase at each

price. Demand is based on needs and wants – a consumer may be able to
differentiate between a need and a want, but from an economist’s
perspective they are the same thing. Demand is also based on ability to
pay. If you cannot pay for it, you have no effective demand.

What a buyer pays for a unit of the specific good or service is called
price. The total number of units purchased at that price is called the
quantity demanded. Market demand is the total sum of the demands of all

individual consumers, who purchase the commodity in the market.
A demand schedule is a tabular statement that shows the different
quantities of a commodity that would be demanded at different prices. It
expresses what quantities of a good will be purchased at different possible

prices. A demand schedule that is shown at Figure 5.1 lists various prices
and the quantity of shoes consumers would demand at each price. For

example, at a price of $140, consumers would not demand any shoes; at a
price of $120, consumers would demand five thousand pairs; at a price of
$100, consumers would demand ten thousand pairs, and so on. Thus, price
and quantity demanded shows inverse relationship.

On the basis of the above demand schedule, we can derive a demand
curve. A demand curve is the graphical representation of the demand
schedule. A demand curve shows the relationship between price and

quantity demanded. This is shown in Figure 5.1. Prices of shoes are
measured along Y-axis and quantities demanded along X-axis. Note that
this is an exception to the normal rule in mathematics that the independent
variable (x) goes on the horizontal axis and the dependent variable (y) goes

on the vertical. Economics is not math.

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