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CA Foundation · Business Economics · Theory of Demand and Supply

In economics, a consumer's demand for a commodity is said to exist only when the consumer has which of the following combination of features?

Demand requires desire for the good, willingness to pay for it, and the ability to pay. All three must be present together. A wish without purchasing power is not effective demand, and market availability or subsidies are not part of the definition.

  1. ADesire for the good, willingness to pay, and ability to payCorrect
  2. BDesire for the good and availability in the market
  3. CNeed for the good and ownership of other goods
  4. DWillingness to pay and a government subsidy

Explanation

Effective demand in economics requires three elements together: desire to buy, willingness to spend, and the ability (purchasing power) to pay. A mere wish without purchasing power is not demand. Availability in the market or subsidies are not defining features of demand.

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