CMA Foundation · Fundamentals of Business Economics and Management · Theory of Demand and Supply
Which of the following is a necessary condition for something to be called 'demand' in economics?
Demand in economics means desire for a good backed by ability and willingness to pay, expressed for a specific quantity at a given price during a given period. A wish without purchasing power does not count as effective demand.
- AA desire to own the product, regardless of ability to pay
- BDesire backed by ability and willingness to pay, for a specific quantity at a given price and timeCorrect
- CNeed for the product as judged by the government
- DPast purchase of the product by the consumer at any price
Explanation
Economic demand requires three elements: desire, ability to pay and willingness to pay, relating to a specific quantity, price and period. A mere wish without purchasing power is not demand, so the first option is wrong.
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