Meaning of Demand
It is necessary to distinguish between demand and desire or need. A sickly child needs a tonic; a peon desires to have a TV set. But such needs and desires do not constitute demand, When, however. the person desiring is willing and able to pay for what he desires. the desire is changed into demand. Demand is always at a price. “The demand for anything rat a given price is the amount or it which will; be bought per unit or time at that price? It simply means how much a person will be willing to buy of a commodity at a certain price in set of possible prices during some specified period of time. At another price he will, of course. buy a different quantity, more at a lower price and I at a higher price. To speak of demand without reference to price is meaningless. Also. the demand is always per unit or time- per day. per week, per month or per year. Here is a very good definition: “B}’ demand we mean the various quantities or It given commodity or service which consumers would buy in one market in a given period or time at various prices, or at various incomes, or at various prices or related goods.
From the point of view of the seller, the demand price is the average revenue (revenue per unit) or income he expects to earn from the sale of a unit of a commodity. Thus, demand price is identical with average revenue (AR). That is why. the demand curve is also drawn as AR curve.
Types of Demand
Three kinds of demands may be distinguished:
(b) Income Demand; and
(c) Cross’ Demand,
Price. Demand, Price demand refers to the various quantities of a commodity or service that a 3. Benham. F. – Economics (1943), p. 36.
The demand curve is also known as the Average Revenue (AR) curve, because the price paid by the consumer is revenue per unit (i.e., average revenue) for the seller.