When we go to the market we see that every commodity
has a price tag, some goods are cheaper and some are very expensive. Have you
ever thought of why these commodities are sold for a price ???
The immediate
answer that can come to your mind would be because it’s useful to us so we pay
a price to acquire it. But if this is so, than why air, rain and sunlight do
not have a price?
They are also very useful to us. This is so because they are
unlimited or free goods (goods like
air which are gift of nature, are known as ‘free goods’ and they do not have a
price).
So we can now say that since goods are useful and
scarce, they have a price, these are called economic
goods.But usefulness and scarcity are only the underlying
forces.
Usefulness expresses itself in the form of demand by buyers, and
scarcity expresses itself in the form of supply
by the sellers. Therefore, prices of goods and services in a free
enterprise economy are determined by the interaction of forces of demand and
supply.
Demand and Supply are the two important
tools of economic analysis.
Meaning
of Demand
Demand for any commodity refers to the amount of
that commodity that will be purchased, i.e., the amount which consumers are
willing and able to purchase at a particular price during a particular period
of time.
