1. Definition of Demand
The desire of a consumer @ buyer to obtain a quantity of
goods or services, supported by the willingness or ability
to purchase and pay for the goods or services at a
particular price in a given period of time ( ceteris paribus
) – Effective demand
2. Quantity Demand ( Qd )
- The quantity of goods or services that is purchased
at a certain price in a given period of time.
- Qd is not necessarily the same as the quantity that is
purchased
- DD curve illustrates the relationship between Qd
and the price of a good @ service
3.
4. Law of Demand
- Assuming all factors are equal, ceteris paribus
( everything remains the same ), when higher the
price, lower the quantity, lower the price, higher the
quantity of DD
- P and Qd have a negative or inverse relationship and
DD curve slope downward from left to right
- WHY the DD curve has a negative slope :-
a) Income
b) Substitution effect
5. DD Function
Qd = a - bP
Qd = Quantity DD ( Units )
a = Qd when price ( P ) zero. This value will intersect the
quantity axis
‘-’ = Indicates the inverse relationship between the P & Qd
b = The gradient of the DD curve
P = Price of good ( RM )
6. Example:-
DD function is Qd = 36 – 4P. Calculate the Qd at
difference price for the following table
P ( RM ) Qd ( Units )
1
2
3
4
7. Example :-
The table below shows the Qd of a good at various prices
P ( RM ) Qd ( Units )
1 40
2 38
3 36
4 34
Find the DD function
Answer : Qd = 42 – 2P
