CA Foundation · Business Economics · Theory of Demand and Supply
In Business Economics, demand for a commodity is said to exist only when a consumer has which combination of features?
Demand in economics requires desire for the good, ability to pay for it and willingness to spend. All three must be present together. A mere wish without purchasing power, or money without willingness to spend, does not constitute effective demand for a commodity.
- ADesire to buy, ability to pay and willingness to spendCorrect
- BDesire to buy only
- CNeed for the good and availability in the market
- DAbility to pay only
Explanation
Effective demand needs three elements together: desire for the good, means (ability) to pay, and willingness to spend those means. A wish without purchasing power, such as a student wanting a luxury car, is not demand in the economic sense. Ability to pay alone is also not enough without willingness.
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