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Demand

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Published in: Economics
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Demand & Law of Demand

Chirag S / Mumbai

9 years of teaching experience

Qualification: Post Graduate

Teaches: CA Foundation, Accountancy, Business Economics, Commerce Subjects, Economics

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  1. Demand Law of Demand CHIRAG J SHAH M.COM, MA (ECONOMICS), CA-INTERMEDIATE, B,ED WIcESS
  2. DEMAND Demand refers to quantities of a commodity which a consumer is willing and able to purchase at given price and particular point of time. Mere desire cannot be construed as Demand. • Demand should always be backed by Ability to pay/purchase. Therefore , Effective Demand = Desire/ Willingness + Ability to Purchase Demand is always stated with reference to price and point of time.
  3. ELEMENTS OF DEMAND Quantity of Commodity a) b) Price of the Commodity Willingness to Purchase c) d) Period of Time KINDS OF DEMAND Direct Demand Joint Demand Derived Demand Cross Demand Composite Demand Ex-Ante and Ex-Post Demand
  4. DETERMINANTS OF DEMAND or FACTORS AFFECTING DEMAND 1. 2. 3. 4. 5. 6. 7. 8. 9. Price of given Commodity Price of Related Goods Substitute Goods Complementary Goods Income of Consumer Taste and Preference of Consumer Expectation about change in Future Prices Size and Composition of Population Season & Weather conditions Distribution of National Income & Wealth Fashion 10.Government Policy
  5. Demand Function Demand Function is a comprehensive formulation which specifies the factors that influence the demand for the product. Demand function states the relationship between the demand for a commodity and its determinants. Demand Function Quantity Demanded = f(Factors affecting demand) Where D= Demand, P= Price, F= Function p R = Price of given commodity =Price of related commodity = Income of consumer
  6. DEMAND SCHEDULE Demand schedule is a tabular statement showing various quantities of a commodity being demanded at various level of price, at given period of time. It shows the relationship between price of a commodity and it's quantity demanded. Demand schedule is of two types:- Individual demand schedule Market demand schedule ce 10 40 Quantity Demanded 100 70 10
  7. DEMAND CURVE Demand curve is a graphical representation of demand schedule.it is locus of all points showing various quantities of commodity that a consumer is willing to buy at various level of price, at given period of time, assuming no change in other factors. Demand curve are of two types:- individual demand curve Market demand curve
  8. Law of Demand Statement of Law — "Ceterius Paribus or Other things remaining constant", Demand for a commodity varies Inversly with its price. In other words if price of a commodity falls, the quantity demanded increases and if the price of commodity rises and vice versa. When price goes up Quantity goes down Quantity demanded goes up verse a ons between quantity demanded and en price goes Down
  9. Law of Demand Explain inverse relationship between in quantity demanded and price of a commodity Higher the price, lower would be the quantity demanded Price and quantity demanded are negatively related This law is only qualitative statement not quantitative statement
  10. Law of Demand Price of related goods should not change. Taste and preferences of consumer should not change There should be no change in the income of the consumer. There should be no expectation about change in future prices. Distribution of income and wealth should be equal. Government policies should not change There should be no change in the size of the population.
  11. 8 Price (Rs) 2.

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