This document discusses demand, including individual and market demand. It defines demand as the quantity of goods consumers are willing and able to buy at different prices in a given period of time. It lists various determinants that affect demand, such as income, tastes/preferences, prices of substitutes and complements, consumer expectations, population, and seasonal conditions. It also discusses the concepts of inelastic demand, elastic demand, and unitary elastic demand.
2. The quantity of goods
consumers are willing and
able to buy at different
prices in a given period of
time
3. Determinants of Demand Examples Effect on Demand
Income of the consumer:
a) Normal Goods
b) Inferior goods
Decrease in salary of
customer
Decreases the demand or
shift of demand curve to left
Taste and Preference Favorable preference Increase in demand
Price of Product:
a) Substitute goods
b) Complementary goods
Increase in price of onions Decrease of demand
Consumer Expectation for
future change in price
potatoes price will rise in
future
More demand in present or
increase in demand today
Population Population increases in
country
Demand rises
Seasonal Conditions Woolen clothes in winter
and in summer
Demand increase in winter
& decreases in summer
4. Individual and Market DEMAND
Individual Demand: from single
individual/family/household.
Market Demand: Total demand of all
buyers, taken together.
16. Unitary Elastic Demand
Ed=1
%change in price is equal to
the % change in quantity
demanded
17. Determinants of PED
the availability of substitutes: the more
substitutes there are for a product, the more
elastic its demand.
the importance of being unimportant: if an item
represents a small part of the consumer’s
budget, then less attention is paid to its price
(demand is more inelastic).
time: the more time consumers have, the more
responsive they are to price changes (and
demand is more elastic).
18. Methods of
measuring
PED
Percentage
method
Graphical
Method
Total Outlay or
Expenditure
Method
Subsitute that can be used in place of other goods
Complemetary those which are used togther
Normal goods inrease in income will decrease demand nd vice versa
Inferior increase in income increase demand
Exceptions means not applicaable to this laaw
Giffen goods increaase with increasee in price…. he most commonly cited example of a Giffen good is that of the Irish potato famine in the 19th century. During the famine, as the price of potatoes rose, impoverished consumers had little money left for more nutritious but expensive food items like meat (the income effect). So even though they would have preferred to buy more meat and fewer potatoes (the substitution effect), the lack of money led them to buy more potatoes and less meat. In this case, the income effect dominated the substitution effect, a characteristic of a Giffen good.