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In economics, demand is defined as the willingness and ability of people to buy and pay for
goods and services. Willingness and ability are important
factors in determining whether a particular good or service has demand. Both must coexist and just having willingness
without ability and vice-versa is insufficient to create demand. Willingness is the readiness or prepardness of people
to buy and ability is the capacity of people to pay for what they buy. Let's take computer floppy disks for example.
Do you think there is demand for them on campus? How about pencils? Is there a demand for them? Writing
papers? Batteries? Postcards? Bus service? Cafetaria food? Soft drinks? Well, I dare say that for each of these
goods or services, demand exists. Why? Because people are willing and able to buy them. Why do you think people
are willing to buy them? The reason is simple -- they either need or want them.
Price too is an important factor in determining people's willingness to buy, especially when what they wish to buy is
a want and not a need. And of course price is the single most important factor that determine ability (or affordability)
to buy. Hence, when there are willingness and ability to buy a particular good or service, we say there is demand for
that good or service.
Do you think there is demand for winter clothing on campus? I don't think so. Even
if they are priced at highly discounted prices (cheap), people are not willing to buy them because here in sunny Malaysia
where the mean temperature is 30-degree Celcius, no one would ever need thick jackets made of some Himalayan animals.
Although there is ability to buy, there is no willingness to do so. With one of the two important conditions missing,
we say there is no demand for winter clothing on campus. How about a brand new Posche 911? Is there a demand for
this sports car on campus? I guess if you ask anyone on campus, he or she would want one. . But, alas, who can
afford one? I, too, am willing to buy one, but certainly cannot pay for one! Willingness alone without affordability
doesn't create demand. Therefore, we say there is no demand for a Posche 911 on campus. Please note, however,
that what is not demanded here may be demanded elsewhere.
In economics, the existence of demand for a particular good or service can be illustrated graphically with
a demand curve. There are various shapes of demand curve, but for the time being it is sufficient to know only
one -- the downward sloping demand curve. A downward sloping demand curve is one that shows an inverse (or negative)
relationship between price and quantity demanded. It shows that when price of a particular good or service is high,
its quantity demanded is low; and when price is low, quantity demanded is high. It seems logical enough since we are
inclined to buy more of a good when the price is low and less when the price is high. This is the the Law of Demand -- a law that states when price is high, quantity demanded is low and when price is
low, quantity demanded is high, ceteris paribus. [Ceteris paribus is a term used to denote that all other conditions
remain constant].
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