This document discusses demand theory and related concepts. It begins by defining demand as a buyer's willingness and ability to pay for a quantity of goods or services. It then covers the theory of demand, including its development by economists like Walras, Marshall, and Arrow. The document discusses the concept of effective demand and different types of demand like direct, derived, competitive, complementary, composite, and perishable versus durable. It also covers determinants of demand like price, income, tastes, expectations, and advertising. The law of demand and demand schedules and curves are explained. Exceptions to the law of demand like Giffen and Veblen goods are also mentioned.

1. TOPICS
1.DEMAND.
2.THEORY OF DEMAND.
3.EFFECTIVE DEMAND.
4.TYPES OF DEMAND.
5.DETERMINANTS OF DEMAND.
6.LAW OF DEMAND.
7. EXCEPTIONS.
8.DEMAND SCHEDULE& DEMAND
CURVE.

2. BY SAYANAT
ROLL NO: 5

4. WHAT IS 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 price.
• The relationship between price and the
quantity demanded is knows demand.

5. THEORY OF DEMAND
PRSENTED BY
:AQUIB

6. A BIT
OF
HISTO
RY
 Leon Walras (1834-1910) a French economist,
gave demand theory as a fundamental
principle of microeconomics which gives the
analysis of the relationship between the
demand for goods or services and prices or
incomes.
 The theory was subsequently developed by
English economist Alfred Marshall (1842-
1924), Italian Vilfredo Pareto (1848-1923),
Soviet Eugen Slutsky (1880-1948), American
Kenneth Arrow (1921- ) and the French-born
Gerard Debreu (1921- ).

7. DEFINITION of 'Demand Theory'
• A theory relating to the relationship
between consumer demand for goods and
services and their prices. Demand theory
forms the basis for the demand curve, which
relates consumer desire to the amount of
goods available. As more of a good or
service is available, demand drops and
therefore so does the equilibrium price.

8. INVESTOPEDIA EXPLAINS 'Demand
Theory'
• Demand theory is one of the core theories of
microeconomics. It aims to answer basic
questions about how badly people want
things, and how demand is impacted by
income levels and satisfaction (utility). Based
on the perceived utility of goods and
services by consumers, companies adjust
the supply available and the prices charged.

9. PRESENTED BY : MUSAIB MEHRAJ
ROLL NO :13

10. CONCEPT OF DEMAND
WANT DEMAND

11. CONCEPT OF EFFECTIVE
DEMAND
• Quantity of a good or service that
consumers are actually buying at the
current market price.
• Aggregate actual demand in an economy
supported by the consumers' capacity to
pay, as opposed to the notional demand.
Effective demand excludes the latent
demand

13. TYPES
DIRECT AND DERIVED
COMPETITIVE
COMPLEMENTARY
OR JOINT
COMPOSITE
PERISHABLE AND
DURABLE

14. TYPES OF
DEMAND
BY HUZIFA WALI
ROLL NO :41

15. Direct and derived demand
 DIRECT DEMAND : Goods that yield direct satisfaction to
the consumers are said to have a direct demand . This demand
comes from the consumers side. Demand for food, cloth and
house etc. are the examples of direct demand.
 DERIVED DEMNAND : When the demand for a commodity is
derived from the demand for the final commodity, that
commodity is said to have derived demand. Wood may be
demanded for the purpose of manufacturing furniture and not
for its own sake.

16. Composite demand
• Composite demand applies to commodities which
have several uses or are demanded for several and
different purposes.
• Wood is used for furniture – tables, chairs, beds,
windows, doors and others . A change in demand for
one of them will affect all others .

17. Competitive demand
 Commodities are substitutes if one can be used in place of the
other. Substitute goods serve the same purpose and therefore
compete for the consumers’ income. They are said to have
competitive demand because of the fact that they compete for
the consumers’ income.
 Examples of substitute goods are Milo and bournvita, butter
and margarine and others.

18. Complementary or joint
demand
• Two or more goods are said to be jointly demanded
when they must be consumed together to provided a
given level of satisfaction.
• Some examples are cars and fuel, compact disc
players and CD.

19. Perishable and durable
good demand
Perishable and Durable Goods demand : Perishable
goods refers to single use goods.
By the contrast, Durable goods are repeated goods.

20. BY PIRZADA FARHAAN
ROLL NO : 25

22. PRICE OF PRODUCTS
 The price of product is an important of demand
in long run and the only determinate in the
short run.

23. PRICE OF RELATED
GOODS
 The demand for a commodity is
affected by the changes in price of
goods
 Related goods may be :
1. SUBSTITUTES
2. COMPLEMENTS

24. CONSUMER’S INCOME
 Income is the basic determinant of quantity of a
product demanded since it determines the
purchasing power of the consumer.
 Income as a determinant of demand is
important both in long run and short run.

25. CONSUMER’S TASTE AND
PREFERENCE
 Taste and preference depend generally on the
changing lifestyle , social customs , religious
values attached to a commodity , habit of the
people , the general livings of the society , age
and gender of the consumer .

26. ADVERTISEMENT
EXPENDITURE
 Advertisement costs are incurred with the
objective of promoting sale of the product.

27. CONSUMER’S
EXPECTATIONS
 Consumer’s expectation regarding the future
prices, income and supply position of goods
helps in determining the demand for goods in
short run.

28. CONSUMER-CREDIT
FACILITY
 Availability of credit to the consumers from the
sellers, banks, relations and friends encourages
the consumer to buy more than what they
would buy in the absence of credit availability.

29. POPULATION OF THE
COUNTRY
 The total domestic demand for a product
depends on size of population .
 The larger the population the larger the demand
for a product .
 With an increase in the size of population,
employment percentage remaining the same,
demand for the product will increase .

30. BY MISBAH SYED
ROLL NO : 23

31. LAW OF DEMAND
• A microeconomic law that states , all other factors being
equal, as the price of a good or service increases , consumer
demand for the good or service will decreases , and vice -
versa
• DEMAND IS INVERSELY PROPOTIONAL
TO PRICE

32. P
R
I
C
E
D
E
M
A
N
D
P
R
I
C
E
D
E
M
A
N
D

33. Demand schedule
o Demand Schedule is a table that lists the
quantity of a good all consumers in a market
will buy at every different price .
o A market demand schedule for a product
indicates that there is an inverse relationship
between price and quantity .
.

34. DEMAND CURVE
• The graphical representation of demand schedule
is the demand curve .
• The demand curve is a downward sloping curve
from left to right. This characteristic of the demand
curve is due to the inverse relationship between
price and quantity demanded.

35. Price per
Cassette Rs
DVD rentals
demand per
week
A 0.50 9
B 1.00 8
C 2.00 6
D 3.00 4
E 4.00 2
1 2 3 4 5 6 7 8 9 10
6.00
5.00
4.00
3.00
2.00
1.00
0.50 A
B
C
D
E

37. GIFFEN GOODS :
The good is named after Sir Robert Giffen (1873 –
1910)
Giffen goods is necessarily an inferior good with very
high negative income of demand . The good is
consumed by low – paid wage earners who spend a
large proportion of their income to buy it.

38. EXPECTATION OF A PRICE RISE IN FUTURE
• Buyers’ expectations about price dominate their buying
behavior. If price rises and the buyer expects further rise
in price then it causes increase in the quantity bought at
higher prices.

39. EMERGENCY
• In case of any emergencies like war ,flood etc the shop
keeper's hike the prices of good. Hence, consumers
demand more good even at higher prices.

40. CONSPICUOUS NECESSITIES
• Certain things become the necessities of modern life.
So we have to purchase them despite their high
price. These things have become the symbol of
status. So they are purchased despite their rising
price . These can be termed as “U” sector goods.

41. INCOME EFFECT
• The income effect is the change in an individual’s
income and how that change will impact the quantity
demanded.

42. IGNORANCE
• A consumer’s ignorance is another factor that at times induces
him to purchase more of the commodity at a higher price. This is
especially so when the consumer is haunted by the phobia that a
high-priced commodity is better in quality than a low-priced one.

43. CHANGE IN FASHION
• A change in fashion and tastes affects the market for a
commodities.