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# Demand Curve

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Its about demand curve for consumers and the related to different factors

Its about demand curve for consumers and the related to different factors

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### Transcript

• 1. Demand Curve
• 2. Topics
Linear Function
Definition of Demand
Definition of Demand Function
Generalized Demand Function
Factors Affecting Demand Function
Slope Parameters
• 3. Linear Function
Definition
An algebraic equation in which the highest degree term in the variable or variables is of the first degree. The graph of such an equation is a straight line if there are two variables.
In linear equation there are two variable names independent variable and dependent variable.
• 4. Linear Equation Cont…
A common form of a linear equation in the two variables x and y is
y = mx + c
Where &apos;x&apos; and &apos;y&apos; are the coordinates of the points that satisfy the function and so lie on the straight line graph.
&apos;m&apos; is the gradient of the straight line graph, and
&apos;c&apos; is the &apos;y intercept&apos; of the straight line graph.
• 5. Linear Equation Cont…
• 6. Definition of Demand
Demand is the amount of goods and services that consumers in a market are willing and able to purchase during a given period of time
• 7. Definition of Demand Function
A Demand Function expresses quantity demanded as a function of product price
The relation between price and quantity demanded per period of time, when all other factor that affects consumer demand are held constant, is called a demand function
A Demand function can be expressed in a most general form as the equation
Qd = a – bP
Where Qd is quantity demanded
a is intercept
b is slope (b = Qd/P)
• 8. Generalized Demand Function
Quantity Demanded
Qd= a + bP + cM + dPR+ eT + fPe + gN
b, c, d, e, f and g are slope parameters
P = Price of the goods or services
M = Consumers Income
PR = Price of related goods or services
T = Taste pattern of consumers
Pe = Expected price of the goods in some future period
N = Number of Consumers in the market
• 9. Factors Affecting Demand Function
P = Price of the goods or services
Qd= a + bP + cM + dPR+ eT + fPe + gN
There is an inverse relation between the Quality demanded
Here the slope is negative i.e. b is negative
• 10. Factors Affecting Demand Function
M = Consumers Income
Qd= a + bP + cM + dPR+ eT + fPe + gN
Direct for normal goods (c is +ve)
Inverse for inferior goods (c is –ve)
• 11. Factors Affecting Demand Function
PR = Price of related goods or services
Qd= a + bP + cM + dPR+ eT + fPe + gN
Direct for substitutes (d is +ve)
Inverse for complements (d is -ve)
• 12. Factors Affecting Demand Function
T = Taste pattern of consumers
Qd= a + bP + cM + dPR+ eT + fPe + gN
It has the direct relation (e is +ve)
• 13. Factors Affecting Demand Function
Pe = Expected price of the goods in some future period
Qd= a + bP + cM + dPR+ eT + fPe + gN
It has the direct relation (f is +ve)
• 14. Factors Affecting Demand Function
N = Number of Consumers in the market
Qd= a + bP + cM + dPR+ eT + fPe + gN
It has the direct relation (g is +ve)
• 15. Factors Affecting Demand Function
• 16. Thank You