DEMAND IN ECONOMICS

What Vedanta calls as desire Economics calls it as demand. The first principle or fact that a student of economics learns is that desires are infinite, but the means to fulfill them are limited. So we have to choose, and in the process of fulfilling our desires, we create fresh ones. Of course, we are told, ‘Overcome desires.’ It is not possible for a majority of the people to even understand the logic of it, let alone be able to practice it. Hence the dictum, ‘Enjoy, fulfill your desires with care’ is the basis of Economics. Economics thus deals with the management of human desires. The various definitions of Economics bring out clearly the intricacies, implications, processes and consequences involved of satisfying human desires both from the demand and supply sides.

Some of the great economists have defined Economics as follows.

Adam Smith (1776) defines the subject as "an inquiry into the nature and causes of the wealth of nations,”

J.-B. Say (1803) defines it as the science of production, distribution, and consumption of wealth.

John Stuart Mill (1844) defines the subject in a social context as: The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.

Alfred Marshall provides a still widely-cited definition in his textbook Principles of Economics (1890) that extends analysis beyond wealth and from the societal to the microeconomic level: Economics is a study of man in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man.

Former London School of Economics professor Lionel Robbins'(1932) book "An Essay on the Nature and Significance of Economic Science" features an all-encompassing definition of Economics that is still used to today. He wrote "Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses,"

Thus most of the definitions of Economics, classical and modern, suggest the subject as the study of:
the economy
the coordination process
the effects of scarcity
the science of choice
human behavior and
human beings as to how they coordinate wants and desires, given the decision-making mechanisms, social customs, and political realities of society.

Economics is divided into two main areas, microeconomics and macroeconomics. Microeconomics examines items on an individual level such as production, consumption and distribution of wealth and also various factors of production such as land, labor, capital and entrepreneurship. Macroeconomics focuses on the economy as a whole, looking at things like trade and unemployment levels, poverty alleviation, Gross National Product, imports and exports, price levels, monetary policy, developmental planning etc.

Human beings have unlimited wants meaning that there is never such a time that a human being is satisfied and not in need of anything. On the other hand, resources available in nature, which should be used to meet those human wants, are limited. The available resources can never be enough to satisfy all human needs.

This phenomenon, where there are unlimited human wants which are to be met by very limited resources, is essentially what economists call scarcity. Scarcity is referred to as the fundamental economic problem, and all economic activities revolve around trying to solve this problem. In view of scarcity, a good which is usable but in abundant supply may not qualify to be called an economic good. Air and water, for example, are just ‘goods’ in the sense that they are readily available and cannot be deemed to be scarce.

Economic goods are presumed to be scarce in supply, that is to say, they cannot at one time meet the demand of humans. The concept of scarcity is so vital in modern economics that it defines economics as a study of human actions and behavior as a relationship between ends and scarce means which have alternative uses.

Along with scarcity comes another equally important concept in economics: Choice. Choice comes about as a result of scarcity, and in a way, choice is conditioned by these circumstances. Since human wants are unlimited and resources limited, it emerges that one cannot be able to practically meet all his wants at any one time. Because of this, it becomes inevitable for someone to choose between the many unlimited wants which one wants to satisfy at any given moment. This, in economics, is not just a conscious decision; it is an inevitable action that one has to take.

Since you make a choice of doing something, or fulfilling a certain want, it turns out that at any one time, there is a certain other want that you have to ignore, or forego, in order to fulfill your earlier want. When you wake up to go to work in the morning, for example, you probably would have loved to sleep just a little more, but then you have to wake up and leave for work because you must earn a living. In this scenario, it can be rightly assumed that you have foregone sleep in order to go to work.

Supply is the quantity of a given commodity that the producer or seller is willing and able to sell to the market at a given price over a specific period of time. The demand for a commodity is the quantity that the buyer is willing and able to buy at a specific period of time and at a specific price. The supply and the demand are the variables that affect the market equilibrium point.

Equilibrium is a situation in which the force that determines the behavior of variables is in a balance and therefore they exact no pressure on the variables to change. In an equilibrium position the actions of all economic agencies are mutually constant.

The concept of demand is based on other concepts such as the utility concept. Utility is the level of satisfaction an individual derives from the consumption of one unit of a good or service. The aim of each individual is to try and maximize his utility with the minimum inputs. A consumer will therefore buy a combination of goods and services that maximize his utility at a minimum cost given the means to achieve the goods and services are scarce.