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The Theory of Wants in Economics

The Theory of Wants

1. Definitions of Wants:

Wants are unsatisfied willingness or needs of human to have something in life. Wants is willingness to buy or have something in life and which they may or may not capable of being satisfy out of available resources.

So, an unsatisfied willingness or needs of person is wants in economics.










2. Function of wants:

Wants is linear function of satiable wants and insatiable wants.

Wants {W}= function {f} (Satiable Wants{SW} & Insatiable Wants {IsW})
W = f (SW + IsW)

Out of balance available fund, how much needs you can satisfy that's know as satiable wants. balance unsatisfied wants are insatiable wants.

3. Magnitude of insatiable wants:

It is an percentage of insatiable need to the function total wants.

Magnitude of insatiable wants {Mi} = (Insatiable Wants / Total Wants {TW})*100 
Mi = IsW/TW*100

If you required the 10 kg of wheat for better nutrition of your family but as it cost you INR. 1,000 and you just remain with INR 775. and Hence unsatisfied wants is 2.25 kg

Magnitude of  insatiable wants is .......

Mi=IsW/TW*100
Mi=2.25/10*100
Mi=22.5%
or
Mi=225/1000*100
Mi=22.5%

4. Entity of Wants:


There are many entity or component of wants:
a. Need
b. Willingness
c. Consumption of resources to satisfy it
d. Readiness to satisfy

5. Characteristics of Human wants:


a. It is unlimited
b. Can't satisfy with available resources
c. It is changeable
d. Utility function of wants may be change from person-to-person.

6. Utility function of wants:


 Utility function of wants is function of reduction in your needs to consumption of your resources. or change in satiable wants to change in consumption of total resources.

Utility function of wants = (% reduction in wants / % of change in consumption of resources)*100 
or
Utility function of wants = (% change in satisfied wants / % change in resources consumed)*100
or 
Utility function of wants = (% increase in satisfied wants/ %  increase in total resources consumed)*100

Comments

  1. Unknown22 July 2017 at 06:29

    Awsm explanation of wants...
    People are confused between wants and needs but your blog can remove their confusion......

    ReplyDelete
  2. Ghanshyam Patel22 July 2017 at 21:06

    Thanks Kinjal.

    I just wrote in context to economics.

    ReplyDelete

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