Let’s make the concept of demand simple….
Do you really think that Economics is a very tough subject? Are you really finding some effective ways to make learning Economics easier? If so, here I come with tricks and also a real understanding of Economics. From today, I promise you, Economics is not going to
be a tough subject to read… to learn… Just stay with me with a little bit of keeping patience.
Today, I want to start with the definition of “Demand” in Economics. It is often seen that the
beginners define Demand with lots of heavy words. Now, my question is – why?? Yes! Why
do we use such kind of heavy words which are hard to explain?? Ok! No issues… Let’s make it simple. Initially, let me take one definition of Demand by Investopedia –
“An economic principle that describes a consumer’s desire and willingness to pay a price
for a specific good or service. Holding all other factors constant, the price of a good or
service increases as its demand increases and vice versa.”
Ok! It is really a good definition. But is it really cool? Interesting to understand? Can it be
realized after reading it in one go? I don’t think so… Let’s make it easier step by step relating
the phenomenon with reality. First of all, let us decide which words to focus on and which
words to ignore from this definition.
Step 1: Delete the 1st three words because demand is not only an Economic principle but
also, a common and inseparable part of life. Is there any human being in the world having no
demand??? Then why do we say it ‘An economic principle’ rather saying that this is the basic
principle of life?
Step 2: Delete the words “vice versa”. A beginner often misinterprets the word. Therefore, it
will be better to delete it initially because no interpretation is superior to
Step 3: Take the phrase “holding all the factors constant”, keep this aside for a while and go
ahead towards the next step.
Step 4: Take the phrase “a consumer’s desire and willingness”. It is really difficult to
understand the difference between desire and willingness for a student who has just started
to learn Economics and on the second day, the student copied it in mind without
understanding its meaning and he/she will be ready to vomit. I only say to them, “let’s
make it simple friend…” forget about the words “consumer’s desire and willingness”.
You are a consumer and you want to consume it and you have the money to purchase it.
That’s it!!!! Yes! It is demand in Economics! Nothing else…
Now, incorporate the phrase – “holding all the factors constant”… here, I want to explore
the term, “all” which includes –
a) the price of another commodity which you want to consume with that particular
b) the price of another commodity which can be used in place of this commodity;
c) the part of your total income u wants to spend on it (because you are not fooled that
you will use all of your money to buy only that product); and
d) your expectation that the price of that commodity may rise or fall and you will take
But here is the fallacy!!!! I have promised you that I will make your understanding easier
about the concept of demand. But what is that??? Too many words to understand a single
The only way to get rid of this fallacy is the creation of images in mind about the fact
because mind always thinks IN IMAGES NOT IN WORDS!!!!
Let us consider your demand is a Bike!
Steps of Imagination!
Step 1: Imagine the bike.
Step 2: Step 1 will automatically direct you towards the next step – understanding of
Therefore, this is not a DEMAND but a DESIRE only.
Step 3: the other factors affecting demand.
It is not the exact substitution but for you, as a beginner, to learn about substitution, it is
quite enough to imagine.
A bike cannot be run without the fuel. Therefore, the image will be of petrol only.
It is a psychological factor and two or three examples of expectation can make you realize
regarding this concept. Suppose, you expect that the price of the bike is going to fall at Rs.
50000/- within 2 months.
This will affect your demand directly and you will wait.
Now, relate all the images with the definition!
I hope! The exact consequence of these images in mind will definitely give a student a clear
idea about Economic demand without reading any definition of Books!!!!
My only objective to make the concept of Economic demand clear to the student who is
just starting to learn Economics and the rest of the non-economic background students who
consider Economics as a tough subject and try to ignore this and the last but not the least to
each of the common people who don’t know -ECONOMICS IS NOTHING BUT A COMMON
I hope! You will like this article. Lots of surprises are waiting for you in my upcoming blogs
and as I will go forward, the bigger surprizes will be there.
Share your problems too. I promise you to make it simple to understand.
If you really like it, hit the like button and comment below your opinions too.