lisacollomI hope this is an appropriate place for my question. I want to be sure I am understanding the concept of need and demand.
I have begun reading Economics in One Lesson, chapter 3, the following:
“But need is not demand. Effective economic demand requires not merely need but corresponding purchasing power.”
Is it correct if I restate,
“Effective economic demand” requires at least two parties to complete a transaction in order to satisfy the conditions of “demand,” or to be realized as “demand.”
This section is specifically concerned with war is not good for the economy.
I’ve imagined a store that has a bar of soap for $0.99 plus tax. I could not buy it unless I had the money. In this case my need remains and demand is… not satisfied?
Conversely, when I acquire $2 and return with the expectation I can buy that bar of soap, I learn that the soap maker’s country was embroiled in war, their facility was bombed, and they will not be making soap for the foreseeable future. I still have a need, and demand remains unsatisfied.
Am I understanding the conceptual difference between need and demand correctly?