Subject - Principle of Economics Topic - DEMAND Useful For - ISC , CBSE , B.COM , M.COM Students

1. 1
Principle of Economics
Demand
Shubham Nigam

2. Content
1:-Meaning
2:-Types of Demand
3:-Determinants
4:-Demand Schedule
5:- Demand Curve
6:- Law of Demand
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3. Demand
• Demand refers to the amount of quantity of a
commodity that the consumer is willing and
able to buy at a particular price during a
particular time period.
• Desire , Willingness to pay , Ability to pay.
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4. Types of Demand
• Individual and Market demand
• Autonomous and Derived demand
• Firm and Industry demand
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5. Determinants
• Price of good
• Consumers' income
• Price of substitute goods
• Price of Complimentary goods
• Consumer’s expected future income
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6. Determinants
• Government policy
• Consumer’s expectation about future price
• Classification of consumers
• Consumer’s taste and preference
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7. Types of Goods
• Consumer’s and Producer goods
• Perishable and durable goods
• Normal and Inferior goods
• Substitutes and complementary goods
• Necessary , comfort and luxury goods
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8. Individual Demand
Individual Demand Schedule
Price Of Milk Quantity demanded by ‘A’
32 5
28 8
24 12
20 20
16 30
12 45
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9. Individual Demand Curve
9
0
5
10
15
20
25
30
35
40
45
50
0 10 20 30 40
Milk Price
(Rs/Lit)
Milk Demand ( Liters)
Qty Demanded
Qty Demanded

10. Market Demand
Market Demand Schedule
Milk Price
(Rs)
Milk Demand ( Liters)
Buyer ‘A’ Buyer ‘B’ Buyer ‘C’ Market
Demand
32 5 10 0 15
28 8 12 4 24
24 12 15 7 34
20 20 19 12 51
16 30 25 20 75
12 45 30 30 105
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11. Law of Demand
• The law of demand states that other factors
being constant (cetris peribus), price and
quantity demand of any good and service are
inversely related to each other. When the
price of a product increases, the demand for
the same product will fall.
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12. Exception to Law of Demand
• Speculation
• Veblen goods
• Giffen goods
• Quality – Price relationship
• Possibility of future rise in price
• Emergency , War , Famine etc
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13. Movement along the demand curve
• Extension / Expansion - A fall in price leads to
an expansion (increase) in demand. As price
falls, there is a movement along the demand
curve and more is bought.
• Contraction - An increase in price causes a
movement along the demand curve, and
quantity demand falls. It is contraction in
demand
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14. Movement along the demand curve
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15. Shift in demand curve
• A shift in the demand curve occurs when the
whole demand curve moves to the right
(increase) or left ( decrease) .
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16. • Increase in demand Decrease in demand
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17. Causes
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18. Important Questions
Q1.What is demand ?
Q2. State factors affecting demand .
Q3.State law of demand.
Q4. Explain exception to law of demand.
Q5.Difference between movement and shift in demand
curve.
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