Demand: Individual Demand and Market Demand


What is Demand? Not, what you wish to have! What you wish to have is simply your wishful thinking or desire. Demand is what you wish to buy against a particular price. It is the desire to buy a commodity (or a particular amount of a commodity) at its particular price, at a point of time.

Demand refers to the desire to buy a particular commodity (or its particular amount/quantity) against a particular price, at a point of time.

Important thing to remember is that demand for a commodity cannot be discussed independent of price of the commodity.

Ask your mother: How much of fruit (say apples) she wishes to buy? Pat should come the reply: It depends on the price of apples. Higher the price of the commodity, lower the purchase of the commodity. It is a standard relationship between price and purchase, on the assumption that other things (other than price and purchase of the commodity) do not change.

A Standard Relation between Price and Purchase

It is that higher the price, lower the purchase of the commodity on the assumption that other things do not change

Individual Demand

It refers to demand for a commodity by an individual buyer in the market. ?Ram buying 10 shirts at a price of Rs. 500 per shirt? is an example of individual demand.

Market Demand

It refers to total demand for a commodity by all the buyers in the market. If Ram and Shyam are the only two buyers in the market, and both of them are buying 25 shirts at a price of (say) Rs. 500 per shirt, market demand would be: 25 shirts at a price of Rs. 500 per shirt. Or it could be 30 shirts at a price of (say) Rs. 400 per shirt, and so on.

Note: Both in case of individual demand and market demand, the inverse relationship between price and purchase holds goods. In fact, buying more at a lower price and buying less at a higher price is a phenomenon related to human psychology. We shall discuss more about it in the subsequent sections.