2. DEMANDDEMAND
1.1. MEANING OF DEMANDMEANING OF DEMAND
2.2. DEFINITION OF DEMANDDEFINITION OF DEMAND
3.3. ESSENTIAL ELEMENTS OF DEMANDESSENTIAL ELEMENTS OF DEMAND
4.4. TYPES OF DEMANDTYPES OF DEMAND
22
3. 33
MEANING OF DEMANDMEANING OF DEMAND
The demand of a commodity is the quantity,The demand of a commodity is the quantity,
which a person is willing to buy at awhich a person is willing to buy at a
particular price, at a particular time.particular price, at a particular time.
4. 44
DEFINITION OF DEMANDDEFINITION OF DEMAND
In the words ofIn the words of Prof. Mill,Prof. Mill, “The demand of a“The demand of a
commodity is the quantity that a consumer iscommodity is the quantity that a consumer is
ready to purchase at a given price”.ready to purchase at a given price”.
5. 55
ESSENTIAL ELEMENTS OFESSENTIAL ELEMENTS OF
DEMANDDEMAND
There must be an effective desireThere must be an effective desire
Desired commodity must be available inDesired commodity must be available in
the market.the market.
The demand must be expressed at aThe demand must be expressed at a
particular price.particular price.
The demand must be expressed withThe demand must be expressed with
reference to a particular time.reference to a particular time.
6. 66
TYPES OF DEMANDTYPES OF DEMAND
1.1. PRICE DEMANDPRICE DEMAND
2.2. INCOME DEMANDINCOME DEMAND
3.3. CROSS DEMANDCROSS DEMAND
4.4. DEMAND FOR CONSUMER GOODSDEMAND FOR CONSUMER GOODS
5.5. DEMAND FOR PRODUCER GOODSDEMAND FOR PRODUCER GOODS
6.6. INDUSTRY’S DEMAND & FIRM’S DEMANDINDUSTRY’S DEMAND & FIRM’S DEMAND
7.7. SHORT-RUN & LONG-RUN DEMANDSHORT-RUN & LONG-RUN DEMAND
8.8. DERIVED DEMANDDERIVED DEMAND
9.9. COLLECTIVE DEMANDCOLLECTIVE DEMAND
7. 77
1.1. PRICE DEMANDPRICE DEMAND
The demand of a commodity at a givenThe demand of a commodity at a given
price other things remaining constant isprice other things remaining constant is
known as price demand.known as price demand.
The demand of a commodity decreasesThe demand of a commodity decreases
on a increase in its price & vice-versa.on a increase in its price & vice-versa.
It can be explained with the help ofIt can be explained with the help of
following diagram:following diagram:
9. 99
2. INCOME DEMAND2. INCOME DEMAND
It explains different quantities of aIt explains different quantities of a
commodity that would be purchased by acommodity that would be purchased by a
consumer at different level of incomeconsumer at different level of income
other things remaining constant.other things remaining constant.
It can be studied in two forms:It can be studied in two forms:
(i)(i) Superior GoodsSuperior Goods
(ii)(ii) Inferior goodsInferior goods
10. 1010
(i)(i) Superior GoodsSuperior Goods
• There is a direct relationship between demand ofThere is a direct relationship between demand of
superior goods & income of consumers.superior goods & income of consumers.
• i.e. with an increase in the income demand ofi.e. with an increase in the income demand of
superior goods increases & vice versa.superior goods increases & vice versa.
• It can be explained with the help of followingIt can be explained with the help of following
diagram:diagram:
11. 1111
QUANTITY DEMANDED OF SUPERIOR GOODS
I
INCOMEOFCONSUMERS
Q
X
Y
O
D
D
I 1
I 2
Q1Q2
INCOME DEMANDINCOME DEMAND
((SUPERIOR GOODS))
12. 1212
(ii)(ii) Inferior goodsInferior goods
• There is an inverse relationship betweenThere is an inverse relationship between
demand of inferior goods & income ofdemand of inferior goods & income of
consumers.consumers.
• i.e. with an increase in the income, demand ofi.e. with an increase in the income, demand of
inferior goods decreases & vice versa.inferior goods decreases & vice versa.
• It can be explained with the help of followingIt can be explained with the help of following
14. 1414
3.3. CROSS DEMANDCROSS DEMAND
• The demand which studies the effect on theThe demand which studies the effect on the
demand of a particular commodity, of changes indemand of a particular commodity, of changes in
the price of other related commodities, otherthe price of other related commodities, other
factors remaining constant.factors remaining constant.
• It can be studied in three formsIt can be studied in three forms::
(i)(i) Complementary GoodsComplementary Goods
(ii)(ii) Substitute GoodsSubstitute Goods
(iii)(iii) Independent GoodsIndependent Goods
15. 1515
(i)(i) Complementary GoodsComplementary Goods
• Goods which are used with a particular good are known asGoods which are used with a particular good are known as
Complementary Goods.Complementary Goods.
• For example: car – petrol, pen – ink, bread – butter, etc.For example: car – petrol, pen – ink, bread – butter, etc.
• There is an inverse relationship i.e. when the price of aThere is an inverse relationship i.e. when the price of a
commodity increases than the demand for both the goodscommodity increases than the demand for both the goods
decreases.decreases.
• It can be explained with the help of following diagram:It can be explained with the help of following diagram:
17. 1717
(ii)(ii) Substitute GoodsSubstitute Goods
• Goods which are used in place of a particular good areGoods which are used in place of a particular good are
known asknown as Substitute Goods.Substitute Goods.
• For example: tea – coffee , etc.For example: tea – coffee , etc.
• There is a direct relationship i.e. when the price of aThere is a direct relationship i.e. when the price of a
particular commodity increases than the demand of itsparticular commodity increases than the demand of its
substitute goods also increases.substitute goods also increases.
• It can be explained with the help of following diagram:It can be explained with the help of following diagram:
19. 1919
(iii)(iii) Independent GoodsIndependent Goods
• Goods which are not related with eachGoods which are not related with each
otherother
• For example:For example:furniture, cloth, etc.furniture, cloth, etc.
• Demand of such commodities is notDemand of such commodities is not
affected by the price of any commodityaffected by the price of any commodity
20. 2020
4.4. DEMAND FOR CONSUMERDEMAND FOR CONSUMER
GOODSGOODS
• The demand of goods which areThe demand of goods which are
demanded by consumers to satisfy theirdemanded by consumers to satisfy their
wants directly.wants directly.
• It is of two types:It is of two types:
(i)(i) Durable Consumer GoodsDurable Consumer Goods
(ii)(ii) Non – Durable Consumer GoodsNon – Durable Consumer Goods
21. 2121
i.i. DURABLE CONSUMERDURABLE CONSUMER
GOODS:GOODS:
• Which are used for a long timeWhich are used for a long time
• Which can be used again & againWhich can be used again & again
• For example: television, freeze,For example: television, freeze,
scooter, car, clothes, furniture, etc.scooter, car, clothes, furniture, etc.
ii.ii. NON – DURABLE CONSUMERNON – DURABLE CONSUMER
GOODS:GOODS:
• Which can be used only onceWhich can be used only once
For example: milk, ink, food, petrol,For example: milk, ink, food, petrol,
22. 2222
5.DEMAND FOR PRODUCER5.DEMAND FOR PRODUCER
GOODSGOODS
• The demand of goods which areThe demand of goods which are
used in the production of otherused in the production of other
goodsgoods
• For example: machines, raw –For example: machines, raw –
23. 2323
6.6. INDUSTRY’S DEMAND &INDUSTRY’S DEMAND &
FIRM’S DEMANDFIRM’S DEMAND
• Firm’s demand means the demand of aFirm’s demand means the demand of a
particular firm of an industry. For example:particular firm of an industry. For example:
Demand of rubber by X Ltd.Demand of rubber by X Ltd.
• Industry’s demand means the demand of allIndustry’s demand means the demand of all
the firms together. For example: Demand ofthe firms together. For example: Demand of
rubber by all firms including X Ltd.rubber by all firms including X Ltd.
24. 2424
7.7. SHORT-RUN & LONG-RUNSHORT-RUN & LONG-RUN
DEMANDDEMAND
• Short-run demand refers to the demand ,Short-run demand refers to the demand ,
which is expected to continue in short – run.which is expected to continue in short – run.
• Long-run demand refers to the demand ,Long-run demand refers to the demand ,
which is expected to continue in long – run.which is expected to continue in long – run.
25. 2525
7.7. DERIVED DEMANDDERIVED DEMAND
• The demand of a particular good or service whichThe demand of a particular good or service which
depends upon the demand of other goods anddepends upon the demand of other goods and
services is known as derived demand.services is known as derived demand.
• For example:For example: demand of intermediate goodsdemand of intermediate goods
and services.and services.
26. 8.8.COLLECTIVE DEMANDCOLLECTIVE DEMAND
• Demand for a particular commodity for no. ofDemand for a particular commodity for no. of
uses.uses.
• For example: demand for water, electricity, etc.For example: demand for water, electricity, etc.
2626
