This document discusses demand, including the demand schedule, demand curve, individual demand function, market demand function, and the law of demand. It explains that demand is the willingness and ability to purchase a good at various prices. The law of demand states that, with all else held constant, quantity demanded varies inversely with price. It also covers elasticity including price elasticity, income elasticity, and cross elasticity. Price elasticity measures the responsiveness of quantity demanded to a price change. Elasticity is important for business and government decision making.

1. MANAGERIAL
ECONOMICS
Teacher:-
Ms. Shruti Mishra

2. Parul Singh (Group Leader)
Shivani Singh
Mohd. Nadeem
Mohd. Baizad Malik
Mohd. Atif
Topic:-
DEMAND

3. DEMAND
Demand is a buyer's willingness and ability to pay a price
for a specific quantity of a good or service. Demand refers
to how much (quantity) of a product or service is desired
by buyers at various prices. The quantity demanded is the
amount of a product people are willing or able to buy at a
certain price; the relationship between price and quantity
demanded is known as the demand.

4. Demand Schedule:-
Demand schedule refers to a tabular
representation of the relationship between
price and quantity demanded.
Demand Curve:-
Demand curve shows a graphical
representation of demand schedule. It can be
made by plotting price and quantity demanded
on a graph.

5. DEMAND SCHEDULE & CURVE

6. INDIVIDUAL DEMAND AND
MARKET DEMAND FUNCTION
Demand function shows the
relationship between quantity
demanded for a particular
commodity and the factors
influencing it.

7. INDIVIDUAL DEMAND FUNCTION
• Individual demand
function refers to the
functional
relationship between
individual demand
and the factors
affecting individual
demand.

8. It is expressed as:
• Dx = f (Px, Pr, Y, T, F)
Where,
• Dx = Demand for Commodity x;
• Px = Price of the given Commodity x;
• Pr = Prices of Related Goods;
• Y = Income of the Consumer;
• T = Tastes and Preferences;
• F = Expectation of Change in Price in future.

9. Market Demand Function:

10. Market demand function refers to the
functional relationship between market
demand and the factors affecting market
demand.
As mentioned before, market demand is
affected by all factors affecting individual
demand.
In addition, it is also affected by size and
composition of population, season and
weather and distribution of income.

11. Market demand function can be expressed as:
Dx = f (Px, Pr, Y, T, F, PD, S, D)
Where,
•Dx = Market demand of commodity x;
•Px = Price of given commodity x;
•Pr = Prices of Related Goods;
•Y = Income of the consumers;
•T = Tastes and Preferences;
• F = Expectation of Change in Price in future;
•P0 = Size and Composition of population;
•S = Season and Weather;
• D = Distribution of Income.

12. LAW OF DEMAND
• The law of demand states that, other things remaining the
same, there is inverse relationship between price and
quantity demanded of a product, i.e. increase in price
reduces the quantity demanded and decrease in price
increases the quantity.
• MARSHALL, the originator of the law, has defined the
law of demand as, “the amount demanded increases with a
fall in price and diminishes with a rise in price”. This law
holds under ceteris paribus assumption, that is, all other
things remain unchanged.

13. Determinants Of The Law Of
Demand
 Price of the product
 Price of related goods
 Level of income
 Taste and preferences of consumers
 Future trend of prices
 Change in population
 State of business
 Distribution of income and wealth
 Availability of consumer credit
 Propensity to save
 Advertisement expenditure
 others

14. Exceptions to the Law of Demand
 Giffen goods
 Conspicuous consumption
 Conspicuous necessities
 Ignorance
 Emergencies
 Future changes in price
 Change in fashion

15. ELASTICITY OF DEMAND
“ Elasticity of demand is the measure of responsiveness of quantity
demanded to change In price.”
Elasticity of Proportionate change In Quantity Demanded
Demand Proportionate Change In Price

16. PRICE
ELASTICITY
INCOME
ELASTICITY
CROSS
ELASTICITY
TYPES OF ELASTICITY OF DEMAND

17. PRICE ELASTICITY OF DEMAND
The Price Elasticity of Demand may be defined as the ratio of relative change
in demand and price variables.
Ed Percentage / Proportional Change In Quantity Demanded
Percentage / Proportional Change In Price

18. TYPES OF PRICE ELASTICITY
Perfectly
Inelastic
Perfectly
Elastic
Price
Elasticity
Relatively
Elastic
Relativel
y
Inelastic
Unitary
Elastic

19. Where:-
D1 = Perfectly
Elastic
Demand (ed=∞)
D2 = Relatively
Elastic Demand
(ed > 1)
D3 = Unitary
Elastic Demand
(ed = 1)
D4 = Relatively
Inelastic
Demand (ed < 1)
D5 = Perfectly
Inelastic
Demand (ed = 0)
GRAPHICAL REPRESENTATION OF DEGRESS OF
ELASTICITY OF DEMAND

20. INCOME ELASTICITY OF DEMAND
The income elasticity of demand is defined as the percentage change in
quantity demanded due to certain percent change in consumer’s income.
Ed Percentage Change In Quantity Demanded
Percentage Change In Income

21. Cross Elasticity Of Demand
It refers to the degree of responsiveness of demand for a commodity to a
given change in the price of some related goods.
Ed Proportionate / Percentage Change In Demand For X
Proportionate / Percentage Change In Price Of Y

22. Determinants of elasticity of demand
The elasticity of demand of any commodity is determined by a number of factors which are
explained below:
• Nature of commodity
• Substitutes
• Goods having several uses
• Joint demand
• Postpone of the consumption
• Income of the consumer
• Proportion of income spent
• Price level

23. Importance of elasticity of demand
• Formulation of government policies
• Businessman
• Decision of monopolist
• Case of joint products
• Industries
• Determination of wages
• Advertisements
• International trade

27. The concept of elasticity is useful for the followings
decision making activities-
• In production i.e. in deciding the quantity of goods to
be produced.
• Price fixation i.e. in fixing the prices not only on the
cost basis but also on the basis of prices of related
goods.

28. • In distribution i.e. to decide as to where, when, and
how much etc.
• In international trade i.e. what to export, where to
export
• In foreign exchange
• For nationalizing an industry
• In public finance

29. The independent variables can be classified under two
categories:-
• 1)- Controllable variables, and
• 2)- Uncontrollable variables.