Question

Name two reasons it is important to distinguish between needs
and demands for services.

What are the differences among causal, intervention, and
impact theories?

Answer 1

Ans 1. Reasons why it is important to distinguish between needs and demand

Human wants are unlimited but means are limited. So there is a problem of choice. Which wants are to be fulfilled first and which are to be postponed are to be decided. It is said mind is faster than wind. So we contemplate innumerable wants although a few are satisfied.

On the contrary needs are basic to human existence just like food, shelter and clothing. Without basic amenities of life human existence becomes unbearable.

Last comes demand. Demand is nothing but desire backed by willingness and ability to purchase. It comes at a price. Demand entails some amount of rights where the consumer is sovereign. In other words:

Demand = Need + Want + Desire

Need = Internal Stimuli. For Example: Thirst/Hunger

Want = It is the solution of the need created. For Example: Thirst - Water & Hunger - Foods

Desire = It comes when you have ability to buy the product.

Part b): Intervention theory talks about the changes in demand due to intervention by the government(political inetrvention) where as casual theory states the relation between cause and effect and impact analysis attempts to measure or estimate the change in economic activity in a specified region caused by specified business organization, policy, program, activity or other economic event.